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How the British Business Bank puts purpose first

Author: ICAEW Insights

Published: 26 May 2023

New CEO Louis Taylor explains how the British Business Bank is increasing the focus on delivering growth to the UK by bringing more flexibility to the way it provides funding to support small businesses.

Louis Taylor is bringing a fresh perspective to the British Business Bank. With experience in global commercial banking, export finance, M&A, international trade and commercial strategy, Taylor, who stepped into the CEO role in October last year, has a strong sense of its vision and purpose post COVID-19. 

“The agenda we have is around scale-ups and start-ups, backing innovation, addressing regional disparity, realising potential both through diverse investing as well as diversity in its broader sense,” he says.

While the British Business Bank is 100% government-owned, its approach is primarily commercial and its agenda largely apolitical, though it will reflect the economic priorities of the government within its broad mandate. With levelling up high on the agenda, they include the Nations and Regions Investment Funds, a £1.6bn commitment to deliver new funding for UK small businesses across the various regions and nations of the UK. As well as new dedicated funds for each of the devolved nations, this includes successors for the Midlands Engine and Northern Powerhouse Investment Funds.

A longer-running initiative is the Start Up Loans programme, which provides personal loans for business purposes of up to £25,000 at a 6% fixed interest rate per annum, with free dedicated mentoring and support to each business, and free guides to start-ups across areas including marketing, SEO and business resilience. Since its inception in 2012, the Start Up Loans scheme has provided more than £941m of funding via more than 100,000 loans. Of those, 40% of loan recipients were women and 21% were from ethnic minority groups.

Tightly defined programmes such as this have delivered real value, says Taylor, but his aim is to bring more flexibility to the way in which the British Business Bank provides its funding. “What the market now needs is for us to figure out how we help a customer or potential customer, rather than at the moment, trying to fit every opportunity into the tight criteria of a standard programme. I think it's that change of mindset that we really need as an organisation, while recognising that we are additional to the private market.”

That means ramping up the focus on what it means to deliver support to customers, Taylor explains. The remit to deliver policy outcomes is always there, but the medium through which the bank achieves that is purely through commerce. “Ultimately, our stakeholders are happy if our customers are happy. Our focus on satisfying customers will ensure that.”

Part of that increased customer focus requires the removal of siloes that have built up around specific programmes. Taylor has made this a priority. “We’re looking very much at the efficiency of the way the organisation operates – again with a view to being able to give a better service to the customer, to deliver more and actually focus on the underlying purpose of the organisation.”

The spectrum of need for small businesses in terms of finance is incredibly broad and nuanced, Taylor explains. With that in mind, it’s important for the British Business Bank not to be too prescriptive about the sectors it targets, while also acknowledging that the government may want to target certain sectors with certain funding streams. 

“I think it’s possible, without being too prescriptive and narrow, to be able to offer an overarching set of solutions to a range of different sectors that are regarded as important in the economy,” Taylor explains.

The increased flexibility could include, for example, how it engages with university spinouts. There are several ways in which the bank could choose to apply its criteria for funding, from regional support to government growth priorities such as tech or life sciences. 

“Three of the top 10 universities in the world are in the UK, producing great commercialisable research. For us to be able to help invest UK institutional money into the commercialisation of that R&D in a way that it currently doesn't often occur – a lot of funding comes from overseas – is really a great thing for us to be doing.”

One simple way in which the British Business Bank is helping to improve access to finance for small businesses is education. There is a surprising lack of knowledge among small companies about the sources of finance available to them, Taylor says. Most only think to go to the major banks for business loans, when there are specialist and challenger banks, and debt and equity funds that might work better for them.

The British Business Bank’s 2022 Small Business Finance Markets report shows that challenger and specialist banks last year delivered 55% of SME funding – their biggest ever share. “That’s just the banks. There are also the debt funds, the financing and leasing association members who do asset backed finance. There’s a range of options. Credit brokers are doing a great job in sourcing those options for small businesses.” 

But for companies to succeed, an idea and the money to put behind it will only get you so far, Taylor says. They need expertise, advice and a strong network to bounce ideas off. That combination of funding and advice is critical to give small businesses the best chance to survive and grow. “All of these elements make up the recipe for success for a business, and each business needs those elements in the right proportion for them. It’s important for us to recognise that SMEs do not fit a cookie-cutter mould. They’re all different.” 

That education element also needs to reflect changing priorities for the market. The move towards net zero, for example, will be a big driver of investment and innovation, but can seem like a potential cost or time burden for small businesses. With the right support, it could be a huge opportunity, says Taylor. 

“The true incremental cost of net zero is significantly lower than the gross cost because a lot of that will go into maintenance, replacement vehicles and other elements that would have occurred anyway. Of course, there are risks around technology, but fundamentally, new industries will grow up around this. For example, we have accredited oil and gas boiler fitters – we will need that for heat pump installation and maintenance. A whole range of industries will proliferate, driven by small, local businesses.”

It’s those small, local businesses that are critical in driving that change. “Not every business is going to be a unicorn and that's fine. The economy shouldn't focus only on unicorns, though there will be some of those as well. It needs to support those local businesses.”

That all feeds into the purpose of the British Business Bank, says Taylor. “We’re there to help realise the greatest potential for the UK. The most inspiring thing for our colleagues is to meet the entrepreneurs they are supporting. You see the resilience, the ingenuity and the creativity day-to-day in the companies we support, whether they are totally innovative, or community heroes. It’s all about creating a balanced economy that creates jobs and opportunity, and thereby creates communities, which isn’t possible without small businesses.”

Insights Special: Access to finance

ICAEW Insights examines the finance options and support available to businesses, as well as the challenges they face in obtaining it.

Access to finance: supporting small businesses

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