Validación y Confiabilidad

Three applications were made under the Micro Credit East heading:

• Micro Credit East Transitional – priority 1.2 Access to risk capital (dated 19/05/2004) • Micro Credit East Eligible – priority 1.1 SME Creation and development (dated

19/05/2004)

• Micro Credit East Transitional – priority 1.1 SME Creation and development (dated 23/06/2004)

Objectives

The objective of all the programmes was to improve the start-up rate, survival and growth prospects of small, predominantly female owned businesses. They were to work on the basis of the micro-credit model where groups of 10-12 owner-managers are established and allocated a trained business adviser from Business Gateway. The peer groups also provide support – it is a “people friendly” group-lending model. Applicants undertake the training, develop their business plan with the assistance of the business adviser and can apply for £500 up to £5,000. Once the business plan is approved by Business Gateway the group appraises and approves the applications. Aftercare is provided by Business Gateway and often the group members continue to meet to provide on-going support and encouragement.

As such the programmes contribute to SE targets for women to establish businesses and addresses barriers to the setting up and growth of businesses.

Demand for this type of service under the pilot programme was very encouraging which was what incited to the application for European funding. The European funding would enable the establishment of an additional 11 groups of 140 businesswomen.

It was expected that 30% of participants would be residents of ‘Areas of Most Need’.

Collaboration with Local Area Initiatives, Job Centre Plus Network, Business Gateways, PSYBT and Local Councils has been secured.

On the whole, this project would have a high degree of strategic integration with Scottish strategies such as: national Birth Rate Strategy; Smart Successful Scotland; SE female business targets; local and national inclusion strategies; and, Objective 3 targets especially measure 4B.2 New Firm Foundation and 2.1 Addressing Social Inclusion. It is also integrated with European strategies such as Women into Business (ESF), Business Mentoring Scotland (ESF), Business Investment for Growth and the National Personal Enterprise shows. Financial resources

• MCE Transitional 1.1: grant required was £20,751; match funding £31,127, total funding was thus £51,878. Total contribution was £56,327 which included £25,200 non-eligible expenditure.

• MCE Transitional 1.2: grant required from the ERDF was £16,341; match funding from the public sector of £24,512 brought the value up to £40,853. Total contribution was £49,712 including £25,200 of non-eligible expenditure.

• MCE Eligible 1.1: grant required was £27,668, match funding was £41,502, bringing the value up to £69,170. Total contribution was £66,702 including £25,200 non- eligible expenditure.

Investments

Only 2 investments of £5,000 each (the maximum sum under the schemes) were made before operations were discontinued. The reason for this is that as there were so many clients, it was decided to switch to European Social Fund funding, under the training and advisory heading. Under ERDF it was felt that only a small number of the clients assisted would be eligible for assistance and the leverage was too low.

Economic targets and outcomes

The applications were expected to directly contribute to the creation and safeguarding of jobs – the table below sets out, as an example, those relating to Micro Credit East Transitional measure 1.2: 19 new jobs and 48 safeguarded jobs. Of the 19 jobs created it was envisaged that 15 would be for women, and 5 would be residents of areas of most need.

Table H.1: Micro Credit East - Expected outputs

Outputs 2004 2005 Total

Instances of assistance to existing businesses owned by women

139 94 233

No of existing businesses from areas of most need 4 3 7

No of existing assisted businesses owned or managed by women

11 8 19 No of instances of assistance to existing businesses

in areas of most need

52 35 87 No of instances of assistance to new businesses

owned or managed by women

93 62 155 No of instances of assistance to new businesses in

areas of most need

34 24 58 Number of new assisted businesses from areas of

most need

2 2 4 Number of new assisted businesses owned or

managed by women

7 5 12

Total number of existing businesses assisted 14 10 24

Total no of instances of assistance to existing businesses

175 117 292 Total no of instances of assistance to new

businesses

116 78 194

Total number of new businesses assisted/ created 9 7 16

Table H.2: Micro Credit East - Expected results

Results 2004 2005 Total

Gross jobs created for women through self employment

9 6 15

Gross number of jobs for women safeguarded 22 16 38

Increase in sales in existing businesses £m) 0.22 0.15 0.37

Increases in sales in new businesses (£m) 0.19 0.13 0.32

Number of gross new jobs created for women 9 6 15

as most in need

Number of jobless people from areas of most need securing employment

8 6 14

Number of jobs safeguarded in areas of most need 8 6 14

Number of organisations which introduce active people friendly policies

1 1 2 Number of people under 25 from areas of most need

securing employment

1 1 2

Total gross jobs created through self employment 11 8 19

Total gross number of jobs safeguarded 28 20 48

Total number of gross new jobs created 11 8 19

Total number of jobless people securing employment

4 4 8 Total number of people under 25 securing

employment

8 6 14

Additionality and displacement

We contacted both investee companies who told us that no other sources of finance were available and that the projects would have not gone ahead without Micro Credit East funding. To this extent, the scheme offers full additionality.

Given the very small size of the scheme, we were not able to investigate displacement. Advertising and application procedures

The scheme was very successfully promoted through the marketing and promotional activity run by Scottish Enterprise.

Management and governance

A private sector organisation – Developing Strathclyde Ltd - was the fund manager, carried out loan appraisal and provided credit check support, repayment schedules and legal documentation.

A monthly monitoring system was implemented that was updated monthly. Advisers also submitted their reports to local Business Gateways and LECs to ensure that all partner organisations are updated.

After the first year a full evaluation would be carried out by a third party. Management costs

Given the very small size of the programme, it is not appropriate to relate management costs to total investments.