European banks back SME sector

UK bank NatWest has joined up with Germany's Deutsche Bank and the Netherland's ING Bank to develop a system that gives small and medium-sized enterprises (SMEs) a stamp of approval for potential investment.

The scheme is intended to improve the quality of funding decisions, and bring technology-based SMEs in line with those in the US and Japan.

NatWest said the service will look at a company as a whole to assess if there is demand for the product and if it has a realistic chance of getting into the market, before putting it forward to investors.

Graeme Jones, head of innovation and growth at NatWest, said: "Innovative and technology-based SMEs come across greater barriers than other small firms because investors don't know enough about the market. With this service, businesses will be able to go to potential investors with a stamp of approval."

A spokesman for the Federation for Small Businesses agreed: "One factor that helps small businesses get funding is familiarity of the branch manager with the industry, and most branch managers aren't familiar with technology. SMEs in this sector need to have more money set aside specifically for them by banks." He added that it is important to have a European focus because companies need to prove they can penetrate into the European market and eventually into the US.

Jones said: "We are very pleased to have EU approval and that three major banks are coming together to seek an agreement. We hope to extend the service across Europe and to get other banks involved."

The European Technologies Appraisal Service will form part of the European Networks and Services Programme.