The South West Regional Development Agency announced that the initiative will be targeted at growth-orientated firms which have drafted viable business plans.

Half of the fund has been earmarked for Cornwall and the Isles of Scilly, while the remaining £5 million will be used throughout the rest of the region.

The agency says that small businesses are a core element of the economy and says it is important to support them through the current difficult conditions.

Stephen Peacock, the organisation’s executive director of enterprise and innovation, adds: ‘Viable and growing companies throughout the south-west need help accessing finance. This fund will go some way towards alleviating these problems.’

John Berry, executive director of SWIG Capital, which will hold the fund, stresses that the scheme is not intended to bail out companies, but to support the growth of those which can make a difference to the regional economy.

Last week, the £1 million Inspire Gateshead project was launched to target resources and services at entrepreneurs, start-ups and growing companies, as well as helping those from disadvantaged areas establish their own enterprises.