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Financing recovery for Northern SMEs

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?

We spoke with Grant Peggie, Director of the Regional Funding team at British Business Bank. He told us 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 on the Regional Funding team, particularly in leading the Northern Powerhouse Investment Fund (NPIF)?

NPIF is an initiative the British Business Bank launched as a key part of the government’s ‘Northern Powerhouse’ vision. The aim of the ‘Northern Powerhouse’ is to help reduce the North‑South divide and create the same economic prosperity in the North of England as seen in London and the South East. The fund nurtures regional entrepreneurship by providing investment and support through microfinance, debt and equity for businesses in the North of England.

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, the government and other stakeholders to ensure that funding is available and accessible to small, growing businesses across the North.

Grant Peggie

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 COVID-19?

We’re 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’m particularly proud of the role that NPIF has played in responding to COVID-19. Our microfinance fund managers have been able to support businesses during the crisis, and now our large debt funds are accredited to provide finance via the Coronavirus Business Interruption Loan Scheme (CBILS).

A recent example includes 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 gave the business enough capital to purchase large amounts of personal protective equipment (PPE) and cover staff costs. The company is now looking to expand its business to Penrith so it can service more remote areas of Cumbria.

Are you seeing any trends in the types of businesses that are applying for particular government loans?

The take-up of the different COVID-19 support programmes reflects the variety of businesses across the North.

The Bounce Bank Loan Scheme (BBLS), which covers loans of up to £50,000, has seen significant demand from retail, leisure and tourism businesses. The crisis has affected these businesses in such a way that they now have an immediate need for cash.

We’ve seen many northern manufacturing businesses looking to CBILS (loans from £50,001–£5 million) to help with cashflow, while the Future Fund (loans from £125,000–£5 million on a matched basis) has been well suited to digital technology, life sciences and medi-tech companies.

Are you an SME or a microbusiness looking for a smaller loan to help your cashflow? Read our tips on how to create a successful application to BBLS before the deadline of November 2020 here.

The UK’s regions are known for being hotbeds of both creativity and innovation. How has the Future Fund in particular performed in these areas?

The North has received 11 per cent of the initial £236 million the government released to support early-stage technology companies. While this figure is comparatively low, we expect it 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-COVID-19, how has the pandemic affected this?

As of December 2019, the British Business Bank had delivered more than £4.31 billion of finance to over 23,000 SMEs in the North. NPIF in particular has invested £168 million into the northern economy since it launched three years ago. There is still work to do, but it’s encouraging to see how well northern businesses have received NPIF and we intend to keep up this momentum.

At the end of 2019, of course, we weren’t aware of the level of uncertainty or the impact of COVID-19 and the subsequent lockdown. The crisis has given added emphasis to the importance of the North in contributing to the UK’s economic recovery.

Northern businesses have been affected in a similar pattern to businesses throughout the rest of Britain. Some sectors have remained resilient, while others such as tourism, hospitality and events, for example, have been severely affected.

The ‘levelling up’ agenda is still a key focus for the government, and I’m pleased that the British Business Bank and NPIF are continuing to contribute to rebalancing the economy.

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 as well as tourism more generally. As we start to move out of lockdown, with the government giving the green light to ‘staycations’, we’ll see tourism start to rise in our great cities, rural and coastal destinations. We’ll then be able to 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 plans. I’d encourage other people 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 the pandemic might help mitigate regional inequalities?

It’s clear that COVID-19 has had a significant impact across the UK, and certain parts of the North which rely on retail, leisure and tourism have been particularly badly hit. I’m optimistic that the government’s ‘levelling up’ agenda will help the North build back a better economy and that the British Business Bank and NPIF will be part of the solution in addressing regional disparities.

For more information on how COVID-19 is affecting businesses nationwide, read our recent Q&A with online tracking platform Beauhurst.

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