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28th February 2018

Ask the Expert: Diversity in finance markets and the impact on SMEs


Northern Powerhouse Investment Fund

Grant Peggie, Director at British Business Bank, talks about how diverse markets for finance can benefit UK SMEs.

SMEs make up the overwhelming majority of the nation’s businesses, generating millions of jobs and almost half of private sector turnover. As a result, the funding options available that help them develop and grow are key in fuelling economic growth. Each business will have different funding requirements and this should be reflective in the finance market.

Diversity in finance markets is generated by the mix of products used, the variety of finance providers available and the array of funding sources enabling these products and providers. New technology is increasing competition and introducing innovative new business models to the market. This has forced established finance providers to improve the range of finance options available to small businesses and to adapt their own service models to the benefit of their customers.

Increasing the diversity of finance options for smaller businesses is important for a variety of reasons:

  • It can improve access to finance for a wider range of smaller businesses, which is particularly important at different points in the credit cycle
  • It can improve the terms and ease of use of finance available to smaller businesses
  • It can improve the appropriateness of the finance available to smaller businesses, improving the prospects that firms find the form of finance best suited to their needs.

All of these factors can help improve the outcomes for smaller businesses, whatever their stage of development and ambitions, and ultimately leave the UK economy stronger.

As the UK’s national economic development bank, which was created to improve finance markets for smaller businesses, increasing the diversity of both supplier and product on offer is a key part of our mission.

Since the creation of the British Business Bank in 2014, we’ve championed a host of alternative debt providers, such as challenger banks, private debt providers, peer to peer debt finance, asset finance, merchant cash advances and other fintech-enabled platforms.

British Business Bank’s Northern Powerhouse Investment Fund is one of those funding channels. The £400m fund was created to invest in Northern SMEs and offers businesses an additional choice when it comes to growing their business, providing capital to fund managers, who 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.

Regardless of the route businesses choose to take to access finance, it is important to note that there is a wide range of options are available. The British Business Bank’s Business Finance Guide can take you through these options. By working together and helping to provide the finance growing SME’s need, we will unlock the potential of businesses in the Northern Powerhouse region.

For further information on the programmes we run, visit – , to view our Diversity In Finance Markets report, visit  – The Benefits of Diverse Smaller Business Markets

For more information on how the NPIF can unlock the potential of your business, visit our website –

The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.

Editors Notes


Find Out More

If you would like to meet with one of our appointed Fund Managers to talk in more detail please go to Funds Available to find the Fund Managers operating in your area



£25k – £100k

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debt finance

Debt Finance

£100k – £750k

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equity finance

Equity Finance

£50k – £2m

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