New finance options for smaller businesses

Author

William McCulla, Director of Property Solutions
Invest NI
Feb 26, 2015

We’re working with the British Business Bank to help broaden finance options for small businesses.

In recent years, due to the global economic downturn, there has been a reduction in the number of private investors and banks willing to lend to, or invest in, small businesses in Northern Ireland. One of the key challenges facing Northern Ireland businesses, therefore, is getting access to appropriate finance to help them grow.

To help, we created our Access to Finance suite of funds providing some £170m of finance. The funds are either debt or equity based and are designed to support businesses of different sizes, or at different stages of growth or development. These funds have so far invested over £50m, greatly improving the funding landscape for businesses.

Read our recent blog on the Small Business Loan Fund.

Read about local firms that have benefitted from the Access to Finance funds.

Techstartni invests in Beacon
Golf Network receives Growth Loan Fund
Kernel Capital invests in Cirdan Imaging
Titan IC systems – one of the most exciting start-ups in the UK

New funding options

We’re also working with other organisations to address funding issues. One of these is the British Business Bank, which today brought its Future of Funding roadshow to Belfast.

The goal of the British Business Bank is to create a more diverse and vibrant finance market for smaller businesses, with a greater choice of options and providers. It also aims to ensure that small businesses understand all the options open to them.

The roadshow highlighted some British Business Bank finance options that are available for smaller businesses in Northern Ireland and are delivered through a range of finance providers.

Read the British Business Bank’s Business Finance Guide to find out which finance options best suit your business.

The finance options include Start-Up Loans and the Business Angel CoFund. Providers include peer-to-peer lending companies Rate Setter and the Funding Circle, which help both lenders and borrowers, cutting costs and improving returns on investment.

Another initiative, the Enterprise Finance Guarantee scheme, is aimed at lenders, encouraging them to lend to viable smaller businesses that would otherwise be declined.

All of these products encourage additional bank funding and provide alternative debt and equity solutions.

The range of British Business Bank funding solutions complements what is already provided in Northern Ireland through Invest NI and other organisations.

A well-functioning finance market

It’s critical that Northern Ireland has a well-functioning finance market to underpin economic growth and ensure that businesses can access the capital they need to grow.

There are encouraging signs that banks are beginning to lend more to smaller businesses. As a result of organisations working together there is also an improved range of finance options such as asset finance and invoice discounting.

What’s the future of small business finance in Northern Ireland?

The Review of Access to Finance for Northern Ireland Businesses carried out in 2013 by DETI’s Economic Advisory Group set out 13 recommendations. Positive progress has been made against many of those recommendations including:

  • The banks are working on improving communication with businesses about what is required to secure lending.
  • The British Business Bank is considering investing in a fund to help Northern Ireland businesses that are constrained by property debt.
  • Research on venture capital in Northern Ireland is nearing completion, which will set out recommendations for the future of early stage and growth finance here.
  • CoFund NI has recently expanded in response to strong demand. Including private leverage, the fund will now amount to £28m.

To find out more about our Access to Finance options call Invest NI on 0800 181 4422.

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