British Business Bank backs £250m lending in region

The Government-backed bank, which was created to improve lending to small and medium-sized enterprises (SMEs), was launched by former business secretary Vince Cable in 2012.

Since then, its investment in finance providers has helped smaller companies across the UK access £1.8bn in funding.

Andrew van der Lem, managing director at British Business Bank, told The Yorkshire Post that the Bank is working to boost competition in the sector.

It aims to add £10bn to the business finance sector through collaboration with providers by 2018/2019.

Despite improvements in the economy and the finance sector, some businesses, such as early-stage ventures, can still face difficulties, he said.

“Very often, banks find it difficult to work out what sort of finance these small businesses need and to work out the risk,” Mr van der Lem said.

“We’re trying bring more finance providers into the market who look at things differently to banks, or have different risk appetites to banks.”

The Bank, which is headquartered in Sheffield, provides funds to finance providers, who then lend directly to SMEs.

In a typical deal, for each £1 provided by the British Business Bank, £3 is funded by the private sector, Mr van der Lem said.

“It means the money we get from Government goes a lot further than if it was just taxpayers money,” he said.

One of the businesses to benefit from the Bank’s backing is food producer Heck.

The family-owned sausage brand, which was launched in 2013, received £1m from Panoramic Growth Equity in exchange for 25 per cent of the business in May 2014.

Since the investment, turnover has more than doubled. It is expected to record revenue of around £6m at its year end in July.

The £1m was awarded from Panoramic’s £34m fund, £20m of which was provided by the British Business Bank.

Andrew Keeble, managing director of Heck, said the cash has allowed the business to invest heavily in its brand.

He said: “We’re a very fast-growing business. We really went out to develop a really great, fun brand that connected with people who weren’t really connected with the sausages category. That’s given us a reason to exist on the shelf.”

One of Heck’s main rivals is Debbie & Andrew’s - the brand Mr Keeble and Heck co-founder Debbie Keeble launched 15 years ago, before exiting the business in 2011.

In launching their new brand, which includes low-fat chicken sausages and burgers as well as more traditional pork options, the husband-and-wife team focused on creating a different “tone of voice”, Mr Keeble said.

He said: “We really invest in the brand messages. It’s very much connecting with a younger generation.”

Following Panoramic’s investment, Heck is working with a London marketing agency to boost brand awareness.

Mr Keeble said: “It’s still very early days and it’s still a very young brand. A lot of brands are hanging their hat on social media; we don’t think that’s enough.”

Stephen Campbell, investment partner at Panoramic Growth Equity, said Heck has been an attractive investment for the fund.

He said: “It tied up with our own values.

“Since the investment, they’ve done everything they said they would. We’re very, very happy with what they’ve done.”

Panoramic lends to fast-growing businesses looking for between £1m and £3m in equity.

“It’s got to be a growth story, and there has to be somebody within the business that’s truly exceptional,” Mr Campbell added.

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The British Business Bank invests in a range of providers, from established banks to peer-to-peer and short-term asset-backed lenders.

As well as focusing on three sectors - start-ups, fast-growing ventures and established firms seeking a better deal - it aims to improve geographic access to funding.

In March, it announced a £125m guarantee with Yorkshire and Clydesdale banks to extend the funding available to small businesses, particularly those in the North.

The Bank also works with venture capital and angel investor networks to promote opportunities outside of the South East.

Andrew van der Lem said: “The more we can establish investor communities in the UK, the better.”