Amity Brew: How firms like the West Yorkshire brewer are turning to alternative funding sources

New research from independent lender Times Finance reveals that nearly 60 per cent of SMEs in the UK have never considered alternative finance providers, relying instead on their main bank for commercial funding.

The Finance Apathy Survey, conducted in partnership with Censuswide, highlights a lack of awareness among SME decision-makers about independent finance options. It found that only 27 per cent of businesses rejected by their banks sought funding elsewhere.

Other studies have found that the majority of businesses are poorly informed about alternative finance. This comes as new research by financial adviser Grant Thornton reveals that many businesses are struggling to secure additional funding for growth against a backdrop of rising input and labour costs.

“The advice on the market is pretty poor at the moment because the availability of business advisers is limited,” says Stephen Waud, chief executive of Business Enterprise Fund (BEF), a non-profit social enterprise that provides flexible finance for businesses across the North of England. “You get pushed towards what are called ‘growth advisers’ in the various LEPs [Local Enterprise Partnerships] who are generalists rather than experts. People need to be more savvy and do their research.”

BEF offers loans of up to £250,000 to SMEs, in collaboration with partners including British Business Bank and British Chambers of Commerce. In the last 12 months, it has invested £21.5m in lending, added £86m to the region’s economy, and created or safeguarded 4,470 jobs. BEF is also a member of York Angels: an angel investor network founded in 2023 to support York’s startup ecosystem.

Waud says: “BEF’s core mission is to transform poorer communities by supporting job growth and increasing wealth. Deprived communities are less able to access mainstream finance, whether it’s due to the postcode or the fact that somebody is starting a new business. Banks don’t generally lend to businesses below three years old.”

Waud has seen a huge shift in lending facilities and client profiles over the last 20 years. “The maximum loan used to be £30,000,” he says. “Over time, we’ve recognised that the landscape of businesses needing support has become much wider. We’ve gone from lending money to primarily sole traders to businesses of 10-20 employees.”

Some businesses, particularly startups, have no choice but to consider alternative finance.

Verity Clarke is the co-founder and director of communications at Amity Brew Co in Farsley. Clarke set up the business, based at Sunny Bank Mills, with her husband Russ Clarke and his business partner Richard Degnan during the Covid pandemic.

In October 2023 she was named as the Yorkshire and Humber ambassador for British Business Bank’s Start Up Loans programme, serving a 12-month term. Amity Brew Co raised £75,000 through the programme, via BEF, to open its first bar and brewery and contributed to the purchase of a canning line so the business could package beers in-house.

“We went into the business with no savings and just a dream,” says Verity Clarke. “It was bleak accessing finance during the pandemic as so many established businesses were worried about survival. There were all these government-backed Covid loans and not one [lender] was wanting to talk to a startup.

“Luckily I [had contacts] at the Bradford Chamber of Commerce from my early career, and I knew that Northern Monk had been supported by BEF when they first started. We engaged with BEF early on and we’re really glad we did because they were so helpful.”

In 2022, the company launched a crowdfunding campaign to support further expansion. A £15,000 target was set on Crowdfunder platform to fund Amity Brew Co’s Spinning Mill Barrel Project, which allows brewers to age their beer in rum or whisky barrels to produce new flavours. The crowdfunding campaign also had a stretch goal of £30,000 to support the purchase of production and storage equipment.

The company took a reward-based approach instead of selling shares in the business. Clarke says: “Some [crowdfunding campaigns] have over-inflated what businesses claim they’re worth and they’ve sold shares that have ended up closing down the business. With our platform, people pay cash in exchange for bar credits. It’s about getting the money up front so that we can develop and thrive, while also giving something back to our loyal customer base.”

Amity Brew Co launched another crowdfunding campaign on February 28 which ran until the end of March. “Following customer demand, we’re opening up our membership again which will give them a discount for life and experiential perks such as brewing a beer with us,” says Clarke. “In this climate I think people really value that sort of reward.”

The money will help fund Amity Brew Co’s move to a new site later this year at Albion Mills in Greengates, Bradford. “We’re going to refurbish the tap room and put in a mezzanine across two floors,” says Clarke. “We’re then going to turn the top level into a co-working and community space.”

Besides crowdfunding, Amity Brew Co has used asset finance to fund its brewing kit and it is also eyeing private investment. Additionally, it has tapped into flexible finance from Square, which provides the brewpub’s ePos (electronic point-of-sale) system.

“It works by Square providing an immediate loan and taking a percentage off our weekend takings,” says Clarke. “It’s helped us at a time when we were waiting for big decisions from our asset finance providers. It’s a really fair scheme as they will take a lower percentage if we have a bad month.”

*This article originally appeared in Yorkshire Business Insider