DCLG is to appoint an independent consultant to assess the new business plan for the North West Fund as it seeks a turnaround in performance to meet investment targets.
A tender document has been published inviting firms to bid for the short contract which is due to be completed by the end of September.
The North West Fund is a £170m debt and equity vehicle funded by a loan from the European Investment Bank loan and grants from European Regional Development Fund.
Programme managers have already seen the chief executive depart this year and taken back £15m for under-performance. The fund was worth £185m when launched in 2010.
The selected consultant will review the new business plan of North West Business Finance, the umbrella organisation which oversees the six sector-specific sub funds.
Key personnel from NWBF will be interviewed along with representatives from each of the fund management companies that manage delivery of the six sub funds of the NW Fund. DCLG said the new business plan will not been made public as it contains sensitive information on the fund managers.
The appointed assessor will test the 'robustness of the investment strategy and how realistic and achievable the revised business plan is, including the allocation of funding between the sub funds.'
They will also 'consider the number of SME investments and average investment levels, including follow-on funding, for appropriateness along with the economic outputs projected to be achieved by each fund.'
The Department for Communities & Local Government also wants to hear the consultant's views on the 'likelihood of the proposed investment mix enabling full repayment of the EIB loan and creating a lasting legacy evergreen fund for the North West.'
The invitation to tender also says the appointed firm will 'review and make comment on the assumptions of NWBF relating to the financial viability of NWBF and the North West Fund including operational costs and fees.'
The consultant will produce a report by 21 September and make recommendations for improvement if appropriate.
Separately, NWBF has commissioned a review of its marketing and started the recruitment process to find a new chief executive, salary between £90,000 and £120,000.
A spokesman for the North West Fund said: "The North West Fund is updating its business plan to reflect the changing economic conditions since it was originally drawn up in 2010. This full review will ensure we continue to meet the needs of businesses seeking investment and our stakeholders.
"Clearly, part of the review includes the appointment of a new chief executive who will lead The North West Fund into the next stage of development. It also includes our annual review of marketing so we continue to communicate as effectively as possible with businesses seeking funding.
"The Fund has performed strongly during its first 19 months, receiving a large number of applications and completing more than 115 deals with £32m invested and in excess of £20m in co-funding secured. The updated business plan will aim to ensure we keep up this momentum."
The deadline for the responses to the DCLG invitation to tender is 31 August.