Small businesses will find it easier to raise equity when the newly formed First Heritage Co-Operative Credit Union (FHC) launches one of the island's first venture capital funds.

The fund, designed to help micro and small enterprises to get started and expand, is scheduled to open for business in 18 months.

Credit Unions usually set a portion of their surpluses aside for charity and to assist with community development. FHC will be the first to invest in businesses instead.

FHC, formed by the merger of Churches Co-operative Credit Union and GSB Co-operative Credit Union, was officially launched yesterday in an effort to create a stronger, more financially powerful institution capable of offering its members greater benefits.

"We have two strong credit unions with common objectives," said Orville Hill, FHC's president. "This is a true merger in the classical sense."

The new entity will boast a combined membership of more than 160,000 and an asset portfolio of $9 billion.

Credit unions have often merged over the past 20 years because one was weak, said Basil Naar, the chief executive officer of FHC. "In this merger, both credit unions were doing very well," he said.

The credit union will provide training and coaching for the companies that its venture capital fund invests in, Naar said.

"It's not just about money. It also has to do with supporting these small enterprises," he said.

Venture capital is normally sought during a business's early stages, especially when it is too small to get money from the capital markets or has trouble securing bank loans.

Although FHC will consider investing in any micro or small business, it will lean more towards those in the productive sectors such as agriculture and manufacturing, he said.

Those sectors need to be better funded, said Naar, who believes the FHC initiative will contribute to nation building. "More local producers mean more exports for Jamaica."

The share of the credit union's surplus that will go to the fund has not yet been determined, he said.

It will hold its investments until the businesses are marketable, then cash in and look for new companies to help. "Our plan is not get in the way of the business or entrepreneur. We will assist and get out of the way."

The merged co-operative will have 14 branches, one in every parish, and there will be no job cuts, he said. It will offer broader access to loans, and more products, such as a foreign exchange service.

The only retail financial service it will not offer is a chequing account, because it is not a member of the Bank of Jamaica Clearing House.