British Business Bank reports SME finance trends, £130 million fund for Wales

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The British Business Bank (BBB) has released its latest Nations and Regions Tracker report, indicating a variety of trends in small and medium-sized enterprise (SME) finance across different regions of the UK, as of Friday.

In Wales, the report showed a significant decrease in external finance usage among smaller businesses, dropping from 50% to 37%. This reduction is largely attributed to the cessation of COVID-related financial support schemes. Additionally, grant usage saw a substantial decrease from 16% to 9%. Despite these downward trends, small business bank loans and leasing/hire purchase/vehicle finance remained popular options, accounting for 15% and 11% usage respectively. On a brighter note, there was a 19% surge in equity deals, despite a 10% reduction in their value. The report highlighted the instrumental role of academic spinouts in propelling equity activity within innovation-led clusters in Swansea, Cardiff, and Newport. To stimulate SME growth, the British Bank is preparing to introduce a £130 million investment fund for Wales.

In the West Midlands, there has been a resurgence in external finance use among smaller businesses, following a dip in 2022. However, equity finance saw a downturn with 10% fewer deals and a 22% investment decrease. The bank managed to support 733 businesses during fiscal year 2022/23, marking a 6% increase from the previous year. Half of these businesses predict a need for finance in the near future, with 30% prepared to harness it for growth.

For Gloucestershire and the South West region, there was a recovery among small businesses after a decline in external finance use in 2022. The resurgence is attributed to universities fostering innovation-led clusters across the UK. Early 2023 data indicates this recovery trend continues with national external finance use returning to 43%, and 42% of South West small businesses expecting to need such finance. Beauhurst’s data collection noted a first year-on-year decline in equity deals outside London since 2011 (-10%), with total investment value also falling (-11%). To address this, the £200m South West Investment Fund was launched this year, part of a series delivering £1.6 billion across regions, promising a positive future for small business finance.

Louis Taylor, CEO of the state-run BBB, and Dr. Sophie Dale-Black, UK network director for the Midlands at the British Business Bank, have both expressed optimism about the future prospects of SME finance in their respective regions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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