Finance markets

Business Matters: British Business Bank – making financial markets work better for small businesses in Yorkshire and the Humber | Blogs

Melanie Ellyard, Yorkshire, Humber and Tees Valley, Senior Executive at British Business Bank, discusses the big issues affecting small businesses in Yorkshire and the Humber and the need to address regional and sub-regional disparities in access to finance .

Small businesses – from established businesses looking to grow quickly to those ready to embark on new ventures – have a huge role to play in the UK’s economic recovery. Across all regions, the UK is home to ambitious entrepreneurs ready to play their part. The key to supporting them will be to ensure that financial markets perform better in all geographies. We need to understand the problems and opportunities encountered in each locality – a challenge but of significant importance.

The regional landscape

Home to 7.2% of UK small businesses, Yorkshire and Humber’s economy has diverse strengths across many sectors. It contains more traditional industries such as manufacturing, textiles and agriculture, as well as new growth areas, from advanced manufacturing around Sheffield to the renewable energy sector in the Humber.

Collaboration is the engine of business success in the region. When companies, universities and local authorities align around specific assets and sectors, the region produces clusters of national and international significance – the HealthTech focus in Leeds is a prime example.

This ambition and collaboration in Yorkshire and the Humber means that there are significant opportunities for small businesses to make their mark. That said, small businesses will continue to face a number of challenges as they navigate the post-pandemic landscape. For many, this will include dealing with debt, rising inflation, and labor and supply chain issues. This underlines the importance of improving financial markets for small businesses in the region, so that they have the appropriate financing to support their growth activity.

Access to financing

For small businesses with the potential for rapid growth, there is a real variety of external financing options available in the region. This includes basic debt products such as overdrafts, loans, and credit cards, in addition to equity and private debt. These types of financing are all supported by programs administered by the British Business Bank, which include the Recovery Loan Scheme (RLS), Regional Angels Program and Start Up Loans.

But while progress has been made in providing finance at the regional level, when you look at the distribution of important forms of growth finance, there is clearly still work to be done to better connect ambitious entrepreneurs in all localities with the good support.

Are rural businesses absent?

British investment bank Monitoring of regions and nations, published in October, exposed the uneven distribution of finance in Yorkshire and the Humber. Although the region is home to 7.2% of UK small businesses, the tracker showed that the region received just 1.5% of domestic investment in equities, largely concentrated in the cities of Leeds and Sheffield.

At a recent roundtable with our business network in Yorkshire and the Humber, participants expressed concern about the network of financial communities in rural Yorkshire, citing the lack of material resources to find ways to access to external funding. The Tracker showed that rural business owners are more likely to resort to injecting personal funds into their businesses, potentially missing out on external opportunities available to them.

Speakers at the event also highlighted the benefits of showcasing small rural businesses that have successfully used external funding to start or grow. This approach can go a long way in increasing the awareness of local entrepreneurs of the opportunities.

And then ?

Ambition in Yorkshire and the Humber needs to be matched with a local financial ecosystem that works best for all small businesses, regardless of geography. How can she better support entrepreneurs in Ilkley or Stallingborough, for example? How can we increase understanding and awareness of external financing options, even in the most remote small business communities?

These will be key considerations for the British Business Bank over the next 12 months and beyond. Tackling regional imbalances in access to finance is a long-term goal for the Bank and the government, being a key part of economic recovery for the whole country and its small businesses in Yorkshire and the Humber have a huge role to play in this.