A new £20 million fund targeting Welsh businesses has been created to boost employment and help firms bid for larger contracts.

The Wales Capital Growth Fund was created by the Welsh government and will be handled by Finance Wales. The £20 million package could generate or safeguard 1,000 jobs, according to official sources.

The fund will bridge a perceived gap for small and medium sized businesses looking for short-term working capital and performance bond requirements. Firms can apply for loans between £50,000 and £2 million.

The fund will be run on a commercial basis and by reinvesting returns, it could supply up to £60 million of funding in the next five years.

Economy minister Edwina Hart said: "[The fund] will provide much needed access to finance for SMEs that cannot currently access working capital and bonding finance from the banking market.

“Many Welsh businesses have the capability and capacity to secure new contracts and now, thanks to the Wales Capital Growth Fund, they can also finance the working capital they need or the performance bonds that are often required."