As highlighted in the British Business Bank’s latest Small Business Finance Markets report, credit conditions have continued to improve over the last few years. Indeed, we have seen nine consecutive quarters of positive net bank lending to SMEs, while peer-to-peer business lending and asset finance were also both higher than in previous years.
However, the report found a reduction in confidence amongst the UK’s smaller businesses. There were just over a third of businesses expecting to grow in the next 12 months – down from 56 per cent in 2016 and a reduction in the percentage of all business size bands seeking new debt facilities (from 11% in 2012 to 6% in the first half of 2016).
The report shows that whilst fast growing firms are located in all regions of the UK, equity investment continues to be concentrated in London and the South East, with awareness of equity finance remaining higher in London than other English regions.
The British Business Bank recently launched the £400m Northern Powerhouse Investment Fund (NPIF) as a first, targeted step towards addressing regional imbalances in the North. Working alongside 10 of the Local Enterprise Partnerships who are located in the Northern Powerhouse region including the Tees Valley LEP & Combined Authority, NPIF will provide through its appointed fund managers a range of debt and equity funding to Tees Valley businesses looking to start up, scale up and stay ahead.
The new initiative is a key part of the government’s Northern Powerhouse vision, with the objective of boosting economic growth in the North of England and placing the region on a par with London and the South East.
To plug the gaps currently seen in the provision of finance, NPIF will provide funding to fund managers who will offer:
· Microfinance, covering small business loans from £25,000 to £100,000
· Debt finance, offering larger business loans of £100,000 to £750,000
· Equity finance, providing early or late stage finance from £50,000 to £2m.
In the coming months, our fund managers will be working with local advisers and growth hubs to identify SMEs that are looking to achieve their business goals, as we look to unlock the North’s economic potential.
The North East Local Enterprise Partnership will be operating a separate regional investment programme for businesses in their area. Further details are available at their website: http://www.nelep.co.uk/
The Tees Valley economy
Built on a strong industrial identity, Tees Valley has a growing reputation as a leading and forward thinking partnership. With world class expertise in chemicals, energy, health innovation and advanced manufacturing, Tees Valley contributes over £12 billion worth of gross value added to the UK economy . While industry has been historically key for the region, Tees Valley has demonstrated strong growth in new sectors, including digital and creative and technological research in recent years. Through the support offered by the Northern Powerhouse Investment Fund, Tees Valley will unlock its potential across these new and exciting sectors, enforcing its reputation as a vital cog in the Northern Powerhouse.