When it comes to finance options “knowledge is power” for everyone

Ordering a coffee used to be such a straightforward task. Milk, sugar and maybe cream were the only real considerations. But today the choice can be mind-boggling.

For those who don’t know their Macchiatos from their Flat Whites, just ‘popping out for a coffee’ can prove an intimidating experience. The same is true of small business finance. Knowledge is power.

This was a key message from one of the stars of television shows, Dragon’s Den and Secret Millionaire who recently urged businesses in Northern Ireland preparing to scale up to become more accustomed with their finance options. Piers Linney believes businesses need to get to grips with the myriad of different funding opportunities available to them, whether that’s debt or equity and how best to approach the ‘universe of investors.’

The former Dragon was speaking to local small businesses during a conference hosted by the British Business Bank, Invest NI and InterTradeIreland.

The two-day Access to Finance: Ambition to Scale virtual conference provided advice for businesses looking to pursue growth whilst also addressing the practicalities of raising finance and participating in Accelerator Programmes.

His comments come as a survey of financial intermediaries in NI, conducted by Ipsos MORI on behalf of the British Business Bank, reveals that 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, such as marketplace and peer-to-peer lending, compared to only 24% who think there is a lack of awareness when it comes to more traditional forms of finance such as bank loans and overdrafts.

There is a strong spirit of entrepreneurship in NI. We have a drive to do things that people say we can’t and that is very inspiring. From the modern tractor to the portable defibrillator and not forgetting the penalty kick, people from NI have given the world so much – although I’m not sure if our English friends are saluting William McCrum this week for his contribution to football.

We are also very good at helping each other and place a lot of importance on social capital. I am a great believer in the power of networking and would encourage small businesses to concentrate on building their professional connections. Networks can be a great source of knowledge. For example, imagine the benefits of speaking to an entrepreneur about finance options after they have already gone through the experience of scaling up their business. But it must be done in the right spirit, with motivation to help others as well. At the British Business Bank, supporting start-ups is something we are passionate about.

We are the UK government’s economic development bank. Established in November 2014, our mission is to make finance markets for smaller businesses work more effectively, enabling them to prosper, grow and build UK economic activity. The Bank is 100% Government owned, but independently managed. It does not lend or invest directly. Instead, we provide funds and guarantees to private sector partners, enabling them to finance a greater number of smaller businesses (either through debt or equity). The Bank works with more than 180 delivery partners to deliver funding programmes that address existing gaps in the market.

In NI the Bank has delivered £81 million of finance to 1,774 smaller businesses, provided 1,239 Start Up loans – worth almost £9.7 million and approved 14 Future Fund applications, valued at £13.6 million. Over the last year, the Bank has supported businesses through the pandemic and nearly 44,500 businesses in NI have benefitted from over £2bn of funding under the two biggest Coronavirus loan schemes administered by the Bank, the Coronavirus Business Interruption Loan Scheme and the Bounce Bank Loan scheme. This level of emergency funding represented 3% of the UK total, in line with the relative size of Northern Ireland’s business population (2%).

In 2018 the British Business Bank announced a £10.5m commitment to WhiteRock Capital Partners LLP’s new Growth Finance Fund. Co-investors to the fund are Invest Northern Ireland (£7.5m) and private investor Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC) (£12m). The fund provides loans from £500,000 up to £2m to smaller growing businesses in NI. To date, over £14m has been invested in more than 15 companies.

So, let’s have a skinny latte and discuss how the British Business Bank can help your business start up, scale up and stay ahead.

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