Increase diversity of
SME finance in the UK

Delivered: Better information on finance options,
contributing to an increased awareness of
finance options amongst SMEs.

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Objective 2

Increase diversity of
SME finance in the UK

Delivered: Better information on finance options,
contributing to an increased awareness of
finance options amongst SMEs.

Why it is important: When we support a small business finance product or help an alternative provider, smaller businesses benefit from better choices and better terms that increased competition can deliver.

Against our second key performance indicator, the British Business Bank is measured on the value of its activity that is channelled through finance providers other than the ‘Big Four’ banks – Barclays, Lloyds Banking Group, HSBC and RBS.

Our objective is to increase the choice of finance for smaller UK businesses – both in terms of supplier and finance type. Our aim is to ensure that more than 75% of our stock is delivered through providers outside the Big Four banks.

Importance of building partnerships

In 2016/17 we took on 12 new partnerships across the business – five in Venture Capital, one in ENABLE Funding, one in the Investment Programme and five through the NPIF. One of the main ways of increasing diversity is to support new entrants and increase the capacity of existing lenders across the scope of the finance markets.

  • We continued to build our partnerships with challenger banks, adding OakNorth as a new partner under our Help to Grow programme.
  • We also supported more debt funds, asset finance providers and fintech players through the Investment Programme (IP), as well as ENABLE Funding.
  • We launched four new early stage VC funds through our ECF programme and helped close one other VC fund through the VC Catalyst.

Birkenhead-based AEV Ltd, a manufacturer and distributor of varnishes, resins, compounds and insulation products to the electrical and electronics sector, received investment from NPIF – FW Capital Debt Finance, a provider under the British Business Bank’s Northern Powerhouse Investment Fund, to invest in new production facilities.

Geographical diversity

We have started to tackle the well-documented lack of finance provisions in the regions outside London and the South East. We launched the £400m Northern Powerhouse Investment Fund in February 2017, will soon launch the £250m Midlands Engine Investment Fund and are working on a Cornwall and Isles of Scilly Investment Fund to help address some of these regional imbalances.


Northern Powerhouse Investment Fund

The Northern Powerhouse Investment Fund will produce greater levels of investment, increase the focus on the potential opportunities across the Northern Powerhouse regions and provide increased flexibility in the type of funding provided. Together these will contribute to better economic outcomes for the region’s businesses, growth and jobs.

The British Business Bank is investing £50m of its own capital into NPIF, which is being matched by an additional £50m from the European Investment Bank. Bringing allocations together into larger funds allows more resources to be targeted at businesses with growth potential across a wider area, through economies of scale, meaning more money can be invested directly in smaller businesses.

The British Business Bank has worked with Local Enterprise Partnerships (LEPs) from the North West, Yorkshire and the Humber and Tees Valley, and with the Department for Communities and Local Government to aggregate the European Regional Development Fund money they receive for the LEP areas.

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Midlands Engine Investment Fund

Similarly, we are working with ten LEPs in the Midlands on the setting up of the Midlands Engine Investment Fund, which we expect to launch in the next few months.

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Cornwall and Isles of Scilly Investment Fund

In May 2017 the Bank was asked to develop a Cornwall and Isles of Scilly Investment Fund incorporating existing legacy funding and new European funding amounting to around £40m. We will be working closely with the Cornwall and Isles of Scilly local enterprise partnership to develop an equity and debt fund.

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Case study

Blake UK

Established in 1971, Sheffield-based Blake UK has grown to become one of the largest aerial, electronics and components manufacturer in the sector, with a £2.2m turnover in 2015/16 and employing 24 staff.

Blake secured a £100,000 loan from NPIF – Enterprise Ventures Debt Finance, a product fund within the British Business Bank’s Northern Powerhouse Investment Fund programme, to finance new product development and invest in new equipment.

The funding will allow the company to diversify its product range into new lines such as CCTV equipment and to strengthen its stock level to reflect the long stock replenishment lead times that accompanies existing ranges. This means the company will be able to keep up with the demands from its growing customer base and ensure that the quality and diversity of its product offering remains high.

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Case study
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