Insights: How British Business Bank helps smaller businesses

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Keith Morgan, CEO of British Business Bank, spoke to Insights about how the government-backed development bank can help smaller businesses.

KeithMorganCEOBritishBusinessBank 

Pictured: Keith Morgan, CEO, British Business Bank

Q: Tell us all about British Business Bank

A: We are a government-backed business development bank, created to bring expertise and government funding to smaller business finance markets, to enable them to work more effectively.

We work through over 80 commercial partners, meaning that we don’t lend or invest directly. Right now, we’re funding over 40,000 smaller businesses across England, Northern Ireland, Scotland and Wales.

Q: What is the problem you are trying to solve?

A: There is no single problem – rather we address a myriad of funding difficulties faced by smaller businesses. We are here to help smaller businesses at every stage of their development – whether starting up, scaling up or simply staying ahead through being able to access a wider choice of finance options.

Securing the first piece of finance can be difficult for a small business. This is why the British Business Bank helps these kinds of businesses through the Startup Loan Company, which offers loans of between £5,000 and £25,000.

Later in the developmental cycle, a business may have some great growth potential and an innovative product or service that they’re itching to bring to the market. At this stage, you need to have large amounts of funding. Because of the risk involved, this funding usually comes in the form of equity. The Angel CoFund, supported by the British Business Bank, makes co-investments into this type of business. In addition, our Enterprise Capital Funds programme combines public and private money to provide early-stage venture capital to high-growth businesses.

Importantly, we are prepared to become a long-term investor and have the tools at our disposal not only to help smaller businesses overcome their immediate funding issues, but also to help them secure real commercial success.

Q: How do you help British businesses?

A: We help in many ways. As I’ve mentioned, we increase supply in areas where finance markets are not necessarily operating to the maximum benefit of smaller businesses. We also work alongside commercial partners to broaden the choice for businesses in terms of providers and options.

We also want to enable smaller businesses to understand which type of finance is most appropriate for them and to have confidence in their choices. This is the central aim of our Business Finance Guide, jointly published with ICAEW and in partnership with EEF and a further 16 finance and business representative bodies. The guide outlines the considerations and options for smaller businesses at all points along their journey from startup to growth.

We are currently supporting £2.4bn of finance to over 40,000 smaller businesses and we participate in a further £3.3bn of finance to small mid-cap businesses. This is a good place to be at the end of our first year of independent operation, but we will always look to do more in response to changing market needs.

Q: What support do you offer to manufacturers?

A: All of our programmes operate across all sectors, but supporting manufacturers is an important area for the bank – we currently support over £546m of finance to manufacturers. The case study below is a great example of this targeted support. This is just one story of how the British Business Bank has connected a manufacturing company in need with a provider that understands the challenges of modern funding options.

 

Read how Bird Stevens Manufacturing has benefitted from support from the British Business Bank:

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Bird Stevens Manufacturing has benefitted from British Business Bank support.

Bird Stevens Manufacturing Limited in Dudley, West Midlands, is a great example of a manufacturing firm that is benefiting from British Business Bank support. After banks declared that they could not provide Bird Stevens with the necessary finance to expand, our partner BCRS business loans stepped in and facilitated the future growth of the company using our Enterprise Finance Guarantee.

Bird Stevens Limited, established in 1936, has a long history of providing metal pressing and engineering solutions from its base in Dudley. Since a management buy-out was successfully completed in 2014, the new company, known as Bird Stevens Manufacturing Limited, has emerged as a key player in its sector.

Bird Stevens Manufacturing required finance as a means of achieving growth. Specifically, a further six employees needed to be recruited to manage increased company demand; training needed to be funded to improve stock management and material control; while money was also required to upgrade the company’s research and development department.

After banks declared that they were unable to provide Bird Stevens with the finance they needed to prosper, BCRS Business Loans was on hand to bridge the lending gap and support the business in its efforts to grow. BCRS provide loans ranging from £10,000 to £150,000 to West Midlands based businesses that are unable to secure finance from mainstream lenders.

Nicola Price, Managing Director of Bird Stevens Manufacturing, said:

"After implementing successful new management solutions, our business was in the fortunate position to progress and to increase sales; unfortunately the only restricting factor was a lack of accessible finance.

"BCRS Business Loans could see the potential in our plans, which filled us with a sense of confidence that we so badly needed to transform our plans into reality. We are now one of the leading companies in our sector. The loans process was quick, efficient and fair and we formed a great relationship with our Loans Officer."

  

For more information visit www.british-business-bank.co.uk

 

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