BANKS and other money providers and economic experts today pledged themselves to provide millions of pounds to help high-tech fledgling businesses in York bloom.

Through Business Press they are launching the pace-setting York Technology Growth Scheme, which will start with at least £6.25 million and possibly as much again to pump-prime up-and-coming ventures in the city over the next two years.

Six banks have linked arms with York Business Development Ltd (YBDL) as well as Science City York and individual business "angels" to promote the scheme which will plug the "equity gap" for businesses needing up to £250,000.

The partnership catches the wave of euphoria in York following last week's announcement that the city is officially the best place in Britain to do business, with 85 per cent of its top firms in profit.

David Dickson, chairman of YBDL, said: "By finding and leading the way to energise York's many good entrepreneurial ideas we are hopeful of ensuring that the city will also lead the top ten next year and for years to come."

The idea has also won the wholehearted backing of Rod Hills, leader of City of York Council, who said that the partnership "has the potential to make a real difference to the city's economy."

The new scheme takes advantage of the under-used Small Firms Loan Guarantee Scheme in which the Government underwrites up to 85 per cent of investments by banks in small firms with big ideas. In the past the uptake on the Government scheme has been poor largely because of the time and effort banks need to vet the ventures. But the York Technology Growth Fund will have a built-in vetting and monitoring panel to keep risk to a minimum. It is managed by high-calibre accountants and other experts, including Mr Dickson, a partner with Garbutt & Elliott chartered accountants, of York, and former bank manager Norman Whyte, chief executive of the York, Selby and Malton Business Advice Centres Ltd.

Other backers in skill include firms within York's Science City Initiative, the University of York, City of York Council, Business Link York and North Yorkshire and the York Professional Initiative.

The result: Natwest, the Royal Bank of Scotland, HSBC, Lloyds TSB, Yorkshire Bank and Barclays in York have each promised to set aside at least £1 million under the loan guarantee scheme. But each one of them also says that if enough good projects warrant more than the limit then the money will be found

Initially the scheme could stimulate finance for as many as 15 businesses this year to reach their potential, but dozens more could benefit as the scheme's success attracts more backers.

The strategy could quickly become the blueprint for tackling the small business "equity gap" problem nationally.

Mr Dickson hopes that in time venture capitalists, who normally will not give any small business project the time of day, will join ranks with the banks.

The fund began with £250,000 which was the residue of money generated through York Business Development Limited over 16 years.

Mr Dickson saw the cash as the basis for a much bigger fund which would draw on the expertise of the city, small investors and all the clearing banks in York.

Updated: 09:36 Tuesday, May 21, 2002