A contestable Dunedin City Council business expansion fund - recently boosted 175% to $661,000 - may move toward three funding rounds in the next financial year.
The Industry Project Fund administered by the council's economic development unit (EDU) received a surprise $461,000 boost this month and takes the 2009-10 fund on offer to $661,000, but remains subject to public submissions and annual plan agreement in June.
EDU manager Peter Harris said opportunities arising from the relatively new fund were timely, with recession upon the country and "tough times ahead", especially when capital-raising is becoming difficult because of the credit crunch and risk-averse investors.
"There are some good [local] businesses out there which could fold because they are running out of cash," Mr Harris said.
However, he emphasised the fund was "not designed to prop up individual businesses", saying a minimum of three businesses or industry organisations was required for an application to proceed. The applicants must provide one-third of the project costs, underpinned by the two-thirds from the EDU fund, at a minium total project cost being $15,000, with no maximum project cost.
Mr Harris said to qualify, applicants had to prove the projects brought economic benefits to Dunedin.
The Otago Chamber of Commerce's chief executive John Christie welcomed the council initiative, and while it was an "unusual step" given the negative economic climate at present, now "was not the time to be shrinking away" but instead to be assisting growth of the city's economic base.
"This is a great signal to the business community that the council is committed to an economic development agenda," Mr Christie said in a statement yesterday.
The challenge for many businesses was adapting to the rapid changes which have been occurring in the financial sector, and being able to make reliable forecasts, he said.
The EDU fund was overseen by a small advisory group, including the chamber of commerce, which made a recommendation. Then councillors voted on each application. The total $661,000 did not have to be spent automatically, Mr Harris said.
Funding applications are open in March and September, but Mr Harris said this was likely to move to three rounds next financial year, and from date of application may take only four weeks to get a final decision from councillors.
Because of the increase in funding, and to speed applications, "there was a likelihood" it would have three funding rounds next financial year, Mr Harris said.
The inaugural fund, established for 2008-09, totalled $240,000 from council and EDU funds with the Oil and Gas Supply Base Industry project receiving $26,000, the Dunedin ICT Cluster Internship Programme $44,000, the Strath Taieri Irrigation Group $35,000 and Tourism Dunedin's cruise ship industry project $7000. There remains $118,000 for the March funding round.
Mr Harris said the business fund evolved from a request for a contestable tourism-related fund, but council decided to have it open to all business sectors, with the likelihood local technology-related companies and tourism operators would be next to make separate applications for the March deadline.
