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.
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