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The British Business Bank – A review of the year 2016-17
The British Business Bank is the UK’s government-owned economic development bank. The Bank’s mission is three-fold: to increase the overall supply of finance available to the UK’s 5.5 million smaller businesses wherever they are in the country; to boost the diversity of the finance on offer to them (both the type of finance and type of provider); and to ensure that smaller businesses are fully aware of, understand, and have confidence in these finance options. All while ensuring taxpayers get good value for money.
To assure that the UK’s smaller businesses can access the finance they need to succeed, the British Business Bank works with the market to provide funds and guarantees via a range of delivery partners – over 100 and counting – enabling them to lend to, or invest in, smaller businesses.
As part of the Bank’s mission to ensure smaller businesses are fully aware of, understand, and have confidence in their finance options, it produces the Business Finance Guide (together with the ICAEW).
Every year the Bank publishes its annual report and accounts reviewing the previous financial year. In April, the Bank published its Annual Report and Accounts 2017 demonstrating significant growth in its capacity to support small businesses.
The Bank’s performance is measured against four key objectives, and in 2016/17 the Bank saw success in each one of these areas:
1. To increase the supply of finance
The total stock of finance provided by the British Business Bank’s programmes has risen by 24% to £9.2bn. The Bank now supports over 59,000 companies.
The Start Up Loans Company (SULCo) joined the British Business Bank group on 1 April 2017. SULCo had at that time provided loans to 46,000 businesses.
2. To help to create a more diverse finance market
Businesses were able to take advantage of a greater diversity of finance options in the last year, with 94% of British Business Bank support provided via non-bank lenders, smaller banks, alternative lenders and equity investors.
3. To promote better information in the market
The Bank’s Small Business Finance Markets report 2015/16, published in February 2017, showed that over 70% of smaller business owners would rather accept slower growth rather than borrow. The launch of this online version of the Business Finance Guide, and an updated print version, have helped raise awareness, understanding and confidence amongst small businesses about the broad range of finance options available across the UK.
The Bank’s research shows that 50% of business owners are now aware of different forms of business finance that may be available for growth.
4. To achieve this whilst managing taxpayers’ money efficiently
2016/17 saw the British Business Bank achieve a 4% adjusted return on capital employed, beating the Government’s 2% target, for the third year in a row.
Good news for British business
Britain’s 5.5 million smaller businesses are used to navigating change and whatever the next 12 months bring, the Bank’s CEO, Keith Morgan, is clear that the British Business Bank is well placed to support small businesses across the UK as they continue to invest, grow and create jobs.
“I am confident that the Bank is working to build an organisation that can support the country’s smaller businesses … we are working to put in place the capability to respond flexibly to any challenges ahead.”
Keith Morgan, Chief Executive, British Business Bank
Here are a few highlights from companies that have been supported by British Business Bank programmes in the last year.
Established by entrepreneur and pastry chef, Rosie Ginday, Miss Macaroon is a high-end patisserie with a difference. With initial funding acquired through the British Business Bank’s EFG programme, this social enterprise offers French macaroons, hand made by long-term unemployed young people, ex-offenders and care-leavers aged between 18 and 35.
The financial needs of established businesses like Cliveland Spinning can be extremely diverse, and funding for businesses in later stages can often be more challenging than for start-ups. Cliveland Spinning had successfully diversified in the face of new market entrants from India and China undercutting their prices – but the rising cost of raw materials put real pressure on cash flow. Cliveland was able to secure an invoice finance facility of £70,000, which transformed their cash position.
Highlights of the last financial year include:
- The interactive version of the Business Finance Guide was launched in June 2016. Start your journey today.
- The Bank’s first regionally focused fund, the Northern Powerhouse Investment Fund (NPIF) was launched in February 2017 in collaboration with the region’s Local Enterprise Partnerships. Similar initiatives for the Midlands, and for Cornwall and the Isles of Scilly will be launched in 2017/18.
- The Start Up Loans Company (SULCo) became part of the British Business Bank group in April 2017.
- Over 59,000 small and medium sized companies are now receiving a loan or investment through our programmes.
- An additional £717m was committed through delivery partners to increase supply of finance to the market.
- The Enterprise Capital Funds (ECF) programme, dedicated to early stage venture capital, now has a total investment capacity of £950m.
- British Business Bank Investments Ltd, the commercial arm of the British Business Bank, has now committed over £580m to providers of finance to UK SMEs.
- The criteria for three of the Bank’s programmes – the Bank’s ENABLE Funding programme, VC Catalyst and Enterprise Finance Guarantee were broadened, in order to open the programmes up to a broader range of finance providers.
- Launching Help To Grow, a new programme that targets smaller businesses with high growth potential, with Lloyds Bank and OakNorth as the first two lenders.
- The number of delivery partners increased to over 100.
You can read the Bank’s full 2017 Annual Report and Accounts here.