The regional development agency is pumping £4 million into South Yorkshire Investment Fund to allow it to keep investing in local business until the end of the year.

The Fund – set up to bridge the gap between the money commercial lenders like banks are prepared to put up and the expansion cash local businesses need – has become a victim of its own success.

So many good investment prospects have come forward that the cash originally provided by the Objective 1 regeneration programme, the government and the private sector has almost been used up.

Even a recently launched "seedcorn fund," designed to test the demand for finance for new businesses, has dried up after being flooded with interest.

Hopes are high that a successor fund will be launched next year, with backing from European Union transitional funding, designed to cushion the blow of Objective 1 aid coming to an end.

However, the Yorkshire Forward investment will help the Fund to carry on its work in the interim.

South Yorkshire Investment Fund chief executive Tony Goulbourn said the fund was delighted that Yorkshire Forward was investing an extra £4 million in South Yorkshire.

"This reflects the strong working partnership we have with Yorkshire Forward. More critically, it will ensure that businesses can continue to access finance when they need it and that the momentum we have gained will not be lost so we can continue to invest up to the end of 2008," said Mr Goulborn.

"The additional funding means that we now have just under £10 million to invest until the end of the year so the message to intermediaries and businesses in this region is get in touch because we are actively looking for applicants.''


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