The government has launched an Enterprise Capital Fund to lend over £40m to high-growth cloud computing and software-as-a-service companies in the UK.
Business and enterprise minister Mark Prisk said: “It is absolutely vital that ambitious small firms can access the finance they need to expand and grow, and this Enterprise Capital Fund will provide at least £40m of funding to viable UK high-tech businesses."
Industry groups have welcomed the measure, but said more should be done to help stimulate growth in the sector.
Peter Chadha, CEO of consultancy firm DrPete, said the government should encourage cloud computing companies to come to the UK through industry-targeted tax breaks.
“This is good news for SMEs, but it isn’t enough. I think it comes down to the question: do politicians really understand technology?” said Chadha.
Phil McCabe, spokesman at the Forum of Private Business, said the government should help SMEs get loans as well as equity investment, which involves giving away a share of their businesses.
“In addressing the equity gap the amount is obviously welcome as a viable source of funding for small firms in this significant growth area,” said McCabe.
He said better provision of lending remains the biggest requirement for SMEs.
“This could be achieved by boosting competition with the banks, one thing we wanted from the budget was tax breaks for private lenders, especially those using crowd-sourced funding,” said McCabe.
"We feel they should be given similar incentives as what equity and venture capitalist investors are getting.”