‘Strong demand for finance’ from NI’s smaller businesses

The survey of financial intermediaries in Northern Ireland highlights a strong appetite for finance locally, both for businesses struggling with cashflow as a result of Covid-19 and for those seeking to move on from the pandemic towards growth.

Conducted by Ipsos MORI, the survey found that a majority of respondents in Northern Ireland feel smaller businesses will require additional finance due to the Covid-19 pandemic during the next 12-18 months, especially debt finance (85%) and early stage equity (72%)

Three in five (59%) local small business finance intermediaries, including accountants, lawyers and small business finance advisers, believe demand outstrips supply when it comes to smaller business finance in Northern Ireland, and that this demand is strong across all stages of development from start-ups through to established businesses.

Around two-thirds of respondents in Northern Ireland who identified gaps in the finance supply said there were gaps in the supply of early stage equity finance (64%) and were almost twice as likely as the rest of the UK to see gaps in later stage equity supply for smaller businesses (38% vs. 20% respectively)

In a picture that is in largely in line with the rest of the UK, intermediaries said that aside from smaller businesses in survival mode due to the pandemic (87%), demand for finance was strongest among early-stage companies (85%) and those looking to scale up (85%).

Respondents in Northern Ireland were particularly positive about local business community support for smaller businesses looking to consolidate success, with 74% saying it was adequate.

The figures also highlight that most Northern Ireland respondents feel smaller businesses are unlikely to be well-informed about options relating to equity and alternative finance

In total 85% of respondents feel there is a lack of awareness around alternative finance options, such as marketplace and peer-to-peer lending, compared to only 24% who say the same when it comes to debt finance, such as bank loans and overdrafts

Mark Sterritt, UK network director, Northern Ireland at British Business Bank said the survey was evidence that despite the major impact of the pandemic on local smaller businesses, the entrepreneurial spirit was strong in Northern Ireland as small businesses seek support to start up, scale up and stay ahead.

He said: “It is good to see that the demand for finance from smaller businesses remains strong in Northern Ireland as we look towards a period of recovery and growth.

“The survey also revealed a perceived gap in the supply of later stage equity in Northern Ireland. This presents an opportunity for smaller businesses to look at other funders and widen their connections to networks throughout the UK.”

Mr Sterritt added: “The British Business Bank remains committed to working alongside our partners to increase awareness of finance options relating to equity and alternative finance. We are here to help build a stronger finance ecosystem and to help Northern Ireland’s smaller businesses start up, scale up and stay ahead.”

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