North East leaders have backed plans to inject £70 million into innovative businesses across the region.

Mayor Kim McGuinness and council leaders across Northumberland, Tyne and Wear and County Durham endorsed proposals for a major programme of investment that it is hoped will support 3,000 jobs over the next 15 years.

A report to the North East Combined Authority’s (NECA) cabinet warned that the region suffers from a gap between the demand for and supply of investment in small and medium-sized enterprises (SMEs) of up to £28 million per year – presenting a significant hurdle to companies with the potential to scale up.

NECA’s plans will involve the creation of a successor to the existing North East Fund, which was backed with European Union money and is due to cease this December, to provide equity and loans to businesses.

Sunderland City Council leader Michael Mordey told a NECA cabinet in North Tyneside that the move “will unlock growth, build confidence in our SME base, turbo-charge university spin-out and ensure the region is a great place to start and to scale a business”.

The North East Fund successor will total around £90 million, made up of £60 million from NECA funding and borrowing plus a further £30 million left from previous regional funds.

NECA also plans to put a further £10 million into a second fund, which could total £28 million with further backing from the region’s universities, specifically targeted at “relatively high-risk, high-growth” ventures in need of early-stage money to “turn innovative research and novel technologies into scaling businesses”.

The combined authority said that it expected £390 million to be invested in SMEs over the next 15 years, with the fund being recycled multiple times as loans are repaid, and 3,000 jobs to be supported through the project.

Karen Kilgour, deputy leader of Newcastle City Council, told Tuesday’s meeting that the North East had a proud history of “centuries of creativity and invention” but the shortage of investment “reinforces existing structural barriers to the North East reaching its economic potential and it must be addressed”.

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North East mayor Kim McGuinness added: “We want to make sure we have a thriving business community in our region, out there creating jobs right across the region at every level. We have had some good success in the region with some fantastic success stories starting up here, but a lot of them need a little bit of a helping hand along the way.”

Lucy Winskell, the business representative on the NECA cabinet, said the new funding would build on the North East Fund, which has provided £152 million of investment since 2018.