TWO weeks of frantic negotiations have staved off the shutdown of an agency supporting 900 businesses in one of the most deprived parts of the region.

A cash flow crisis at Wear Valley Development Agency, in Bishop Auckland, had forced its board to give notice of closure and issue six staff with redundancy notices.

With no reserves to fall back on, the agency appeared to be going under, largely because of delays in payments for work subcontracted from Business Link County Durham.

This, in turn, relies on money coming through from the European Regional Development Fund which has been an important source of support for industries hit by Britain's foot-and-mouth outbreak.

When the crisis came to a head last month Wear Valley District Council immediately bought the agency breathing space with the offer of a loan.

Chief executive Geraldine Pinder led negotiations with Business Link on a rescue package which will mean payments will come through monthly until the end of the year.

By then, she is confident, the agency will be on a firmer financial footing. She said: "If nothing else, this has exposed our vulnerability.

"We don't have cash reserves so when we get delays in funding or massive changes in the way business support is offered we don't have anything to see us through.

"We don't have a problem with the fact that we have to earn our money. We work very hard at what we do and I am proud of what we have achieved.

"If we didn't operate on a commercial basis ourselves we couldn't hope to understand what our businesses go through. We know ourselves what it is like to have jobs under threat. This was a nightmare when it happened but our board made the only decision is could to act in a responsible, legal and moral way when presented with the cash flow figures.

"It has been a difficult two weeks but we are now in a position to access grant money and we can look to the future with a great deal of confidence.