FUND managers are offering a £3m lifeline to small businesses struggling to borrow money during the global downturn.

NEL Fund Managers Limited will oversee the distribution of the money provided by development agency One North East.

The Evolve Mezzanine Fund will provide finance to small and medium-sized businesses in the North-East.

Barrie Hensby, chief executive of NEL, said: “We have been providing mezzanine debt finance for the past nine years and this is an area of significant growth within the North-East business community.

“Our new Evolve Mezzanine Fund provides an additional avenue to investment for those businesses in the region seeking this type of debt finance.”

Dr Simon Goon, head of Business Investment at One North East, said: “It is extremely important that businesses in the North-East have access to this type of investment capital at any time, but doubly so in the current circumstances.

“We have contracted with NEL to deliver this commercially into the market place with the objective of full recovery of our investment through a combination of repayment and profits made on the equity options.”

Mezzanine debt is used by businesses that are unable to raise secured lending from their bank, frequently due to a lack of collateral, but do not want to, or cannot raise equity.

Mezzanine funding involves a loan with the option to acquire equity in the future.

For more information about NEL’s investment criteria or the Evolve Mezzanine Fund, visit nel.co.uk or contact Barrie Hensby on 0845-111-1850.