The British Business Bank has launched a £660 million investment fund for small businesses across the north of England.
The plan behind Northern Powerhouse II Investment Fund is to increase the supply and diversity of seed funding for smaller businesses in the region, providing funding to businesses that would not otherwise receive investment, and helping to break down barriers to accessing finance.
With loans of between £25,000 and £2 million, along with equity investments of up to £5 million, the fund will continue to invest in companies operating in the North West, Yorkshire and Humber, and Tees Valley, and will now include the entire North East.
The investment plan builds on a fund launched in 2017 which has received more than £1bn of direct and private sector co-investment into local businesses.
“The success of the first Northern Powerhouse Investment Fund has demonstrated the instrumental change that access to finance can make for small businesses,” said Louis Taylor, chief executive of the British Business Bank.
“From creating hundreds of jobs to developing innovative products, we have seen companies that previously lacked financing options accelerate their growth process, which has ultimately benefited the entire Northern economy.
“That's why it was important to continue the Northern Powerhouse Investment Fund into its next phase. With more funding available and a greater geographic reach in the North East, the Northern Powerhouse Investment Fund II will engage more stakeholders across all regions, bringing the “The business community will come closer together to create more opportunities for entrepreneurs around the world.”
British Business Bank builds on previous successes
One of the companies to benefit from the first fund is Nova Pangea Technologies (NPT), a Teesside-based cleantech company that has created a new process to convert waste wood and agricultural waste into biofuels which are then used to produce sustainable aviation fuel.
With funding of £2.3 million in 2019 and £900,000 the following year from the first Northern Powerhouse Investment Fund, NPT launched a demonstration facility and expanded its senior leadership team. It is now on track to deliver its first commercial plant.
“The involvement of the Northern Powerhouse Investment Fund is one of the key reasons why we are in the strong position we are in today. Our NPIF fund manager was willing and able to take a deeper look at our business and it was clear that the Fund was committed to empowering a Northern company dedicated to delivering climate solutions,” said Sarah Ellerby, executive director of the NPT.
“Since participating in the fund, we are now partnering with our country's leading commercial airline and have established ourselves as a leader in the production of sustainable aviation fuel.”
Nine fund managers have been appointed to manage the fund in the various districts, and the British Business Bank will be holding a series of roadshows to small business financial intermediaries across the region.
“This new fund will unlock millions in capital and loans for SMEs across the North to reach their full potential and builds on the vital work of the British Business Bank to ensure that any small business owner in the UK can scale and grow.” said Kevin Hollinrake, minister. of the State for companies, markets and small businesses.
“SMEs are the growth engines of our economy and across government we are improving access to finance, reducing bureaucracy and removing barriers to ensure they can go further and faster than ever before.”
