News

4th August 2020

Financing recovery for Northern SMEs

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Northern Powerhouse Investment Fund

The Coronavirus (COVID-19) pandemic has affected businesses all across the UK, with many feeling the pinch due to disruptions to their cashflow. We know that this severe crisis has hit various sectors in different ways, but has there been a difference regionally as well?

Grant Peggie, Director of the Regional Funding team at British Business Bank recently spoke to the Business Finance Guide about the challenges that businesses in the North of England have faced as a result of COVID-19, and how they are using government support in financing recovery.

Tell us about your role at the Northern Powerhouse Investment Fund ?

As the Director of the Regional Funding Team at the British Business Bank, my role is to work with the 10 Local Enterprise Partnerships, our Fund Managers, Government and stakeholders to ensure that funding is available and accessible to small growing businesses across the North.

The regional business landscape is obviously very different from that of London. What different kinds of businesses have applied for the government’s relief measures in response to COVID19?

We are seeing a wide spectrum of businesses from across the North applying for support from the British Business Bank’s programmes. This ranges from self-employed café owners through to well established manufacturers employing hundreds of people.

I am particularly proud of the role that NPIF has been able to play in responding to the COVID-19 crisis. We have been able to support businesses during the crisis through our Microfinance Fund Managers and now the large debt funds are accredited to deliver CBILS. Examples include Cumbria View Care Services, a provider of private home care for the elderly, which received a £100,000 NPIF loan backed by CBILS.  The investment provided the business with enough capital to purchase large amounts of personal protective equipment and cover staff costs. The company is now looking to expand its business to Penrith in order to service more remote areas of Cumbria.

Are you seeing any trends in the nature of businesses primary producers, manufacturers etc that are applying for particular kinds of loan product CBILS, BBILS, Future Fund etc?

The take up of the various COVID-19 support programmes reflect the variety of businesses across the north. The Bounce Bank Loans (up to £50,000) have had significant demand from retail, leisure and tourism businesses who have been greatly impacted by the crisis. Northern manufacturing businesses have been looking to the CBILS (£50,001 – £5m) fund to help with cashflow, while the Future Fund (£125,000 – £5m) has been well suited to digital technology and life sciences / medical technology companies.

The UKs regions are known for being hotbeds of both creativity and innovation, how has the Future Fund in particular performed in the regions? 

The North has received an initial 11 per cent of the initial £236m released by the Government to support early stage technology companies. However, we expect this figure to increase over the next few months, particularly as the NPIF Equity Fund Managers are able to put forward existing portfolio companies for Future Fund matched funding.

As regional rebalancing and ‘levelling up the North’ were central to the Government’s plan pre-COVID19 how has this been affected by the pandemic?

The current COVID-19 crisis has again emphasised the importance of the North in contributing to the UK’s economic recovery. The ‘levelling up’ agenda is still a key focus for the Government and I am pleased that the British Business Bank and the Northern Powerhouse Investment Fund are already contributing to rebalancing the economy.  As of December 2019 the British Business Bank has delivered more than £4.31bn of finance to over 23,000 SMEs in the region whilst NPIF has invested £168m into the northern economy since it launched three years ago. There is still work to do, but it’s encouraging to see how well NPIF has been received by northern businesses and we intend to keep up this momentum.

The impact of the pandemic on the tourism industry is well documented, what are the implications for regional destinations?

The crisis has had a severe impact on regional destinations across the North and tourism more generally. As we start to move out of lockdown, we will see tourism start to rise in our great cities, rural and coastal destinations and we can all play our part in supporting regional destinations by visiting and supporting small businesses across the North. My family will be spending our holidays in the UK this year with the North of England being a major part of our holiday plans. I would encourage others to do so as well while sticking to the Government’s guidelines on social distancing.

Will COVID 19 ultimately improve or worsen regional disparities? In the medium- to long-term, is it possible that Covid-19 might help mitigate regional inequalities?

It is clear that COVID-19 has had a significant impact across the UK and certain parts of the North which are reliant upon retail, leisure and tourism have been particularly badly hit. I am optimistic that the Government’s ‘levelling up’ agenda will help the North to build back a better economy and that the British Business Bank and the Northern Powerhouse Investment Fund will be part of the solution in addressing regional disparities.