Preseli Pembrokeshire AM Paul Davies is concerned that delays in the distribution of European cash grants means Pembrokeshire Business Initiative has had to lay off a third of its workforce and cut back on its work drastically.
The company, which offers advice and support to start-up and existing businesses, has also warned that more staff may have to go. However, it is also emphasising that its core business is still going strong.
Convergence funding, which replaced the Objective One grants, was due to be awarded in October this year but the Welsh Assembly Government has delayed any handouts until at least April next year. This means that PBI cannot apply for funding, nor bid for any funded projects, until sometime next year.
"The problem has been one of timing, everything is too damn slow," said PBI chief executive Richard Packman. He explained the situation to Preseli Pembrokeshire AM Paul
Davies who contacted PBI after hearing about the cutbacks. "I was concerned after hearing from businesses about the problems being faced by PBI and have now been fully briefed by Mr Packman," said Mr Davies.
PBI's remaining Objective One funded projects are due to come to an end by Christmas.
"For the last 18 months or so we have been maintaining the service at our own expense but we can no longer continue that process and are downsizing," said Mr Packman.
"We have lost a third of our staff, we used to have 30 and now we are at 20 and in the short term we may have to lose more.
"We used to have seven people delivering ecommerce and that's down to three-quarters of a person. Strong, experienced advisors are being lost and important projects are being lost and won't be replaced in the short term.
"We can no longer continue to fund services and the availability of services to businesses in Pembrokeshire has been significantly reduced."
The company celebrates its 25th anniversary this year and is keen to stress that it is continuing to offer excellent support and advice.
It has secured budgets of £1.5 million and start up support including the New Deal element has been re-contracted for at least three years and general and specialist advisory services have been secured via the Rural Development Plan.
"Pembrokeshire businesses can be assured that core services are already in place for the next few years and more development work is already close to fruition in many delivery areas," added Mr Packman.
Mr Davies has highlighted the problems with convergence funding in the Senedd and will now be writing to Ieuan Wyn Jones about the matter.
"PBI has played a vital role in supporting start up and growing businesses in Pembrokeshire for a quarter of a century and I am extremely concerned to hear about its funding problems," he said.
"The Welsh Assembly Government has known for years that the European funding system was changing and these delays are unacceptable.
"Given the difficulties that companies are facing with the credit crunch this couldn't come at a worse time for many. The Welsh Assembly Government needs to support these enterprise agencies as a matter of prioirty."