Keith Morgan, chief executive of the British Business Bank joins City A.M. for this week's 'Building Britain’s Businesses', to discuss how the government-backed scheme supports smaller businesses across the UK.
This month marks two years since the British Business Bank was formally established. The bank was created to make finance markets work better for smaller businesses across the UK, enabling them to start, grow and thrive.
Since that time, we have developed a network of more than 90 partners across the financial services industry – including LDF – in order to unlock new finance and bring greater choice and information on finance options to smaller businesses.
Businesses apply for finance through our partners, and because they work with us they can lend and invest more, especially to younger and faster growing companies. Through our programmes, we are currently supporting more than 51,000 smaller businesses with over £3.2bn of finance – and are participating in a further £4.6bn of finance to small mid-cap businesses with high growth potential.
IN PARTNERSHIP WITH LDF
At the British Business Bank, we see asset finance as an important funding option for businesses looking to grow. Our annual Small Business Finance Markets Report, published at the beginning of 2016, revealed that more than half of small businesses anticipated growth during the year ahead and that more than a quarter of businesses seeking finance were doing so to purchase fixed assets. There have been year-on-year increases in the size of the asset finance market since 2009, with the most notable growth coming in hire purchase and SME asset finance.
To develop the market further, we are working closely with our partners to help smaller businesses gain access to asset finance. This is vital in enabling them to secure high standard equipment that would otherwise be unaffordable, in a way best suited to their business operating requirements. As part of those efforts, earlier this year we agreed a £51m facility with LDF, under our ENABLE The British Business Bank: Unlocking SME finance Funding programme, to boost the company’s provision of asset finance for businesses across the UK.
SUPPORTING AND ENABLING CHOICE
According to our research, over half of SMEs go to their main current account provider when they identify a finance need; with around a third giving up if they are not offered the full amount of finance. This can mean potential expansion opportunities are missed and new jobs remain uncreated, with an adverse knock-on effect for UK economic growth.
As the UK’s economic development bank, part of our remit is to ensure that smaller businesses have access to a diverse range of finance options – from a variety of traditional, challenger and non-bank lenders. We are also committed to ensuring smaller businesses understand the different finance options – including asset finance – available to them from either their bank or another lender. We want businesses to be able to access the most appropriate funding for their needs, and that many businesses need help and information in order to secure the right type of finance. To this end, we created The Business Finance Guide in collaboration with the ICAEW and with input from 23 other bodies across the business and finance sectors. The guide helps businesses understand the key factors in deciding which type of finance they need for their business, based on where their business is today and on their future ambitions.
The Business Finance Guide is an essential starting point for businesses looking to find the most suitable finance, and we encourage business owners to take the interactive journey online or print/download a copy.