Only 11 per cent of loans from British Business Bank pandemic fund went to Northern firms
Just 11 per cent of the loans offered to help high growth firms during the pandemic went to companies in the North of England, with three quarters of all lending going to firms in London and the South East.
Figures seen by The Fond News reveal that of the 1,236 convertible loans agreed by the British Business Bank’s Future Fund, only 35 went to companies in US. Meanwhile 696 loans were issued to London firms.
Of the £1.2bn loaned under the scheme by the Sheffield-headquartered British Business Bank, a total of £33.7m found its way to US businesses. This compares to £720.1m to firms located in London and £147.8m in the South East, accounting for close to three quarters of all lending.
The Future Fund scheme was launched by Chancellor Rishi Sunak in April of last year. It is designed to issue convertible loans to what it called at the time “UK companies with good potential that typically rely on equity investment and are currently affected by COVID-19”.
The Treasury said the scheme would provide financial assistance throughout the Coronavirus crisis to allow successful applicants to continue “their growth trajectory and reach their full economic potential”.
It closed to new applications in January.
Henri Murison, director of the Northern Powerhouse Partnership, said: “While the funding allocated has gone a long way to helping businesses across the Northern Powerhouse, London and South East have received three quarters of all the lending – compared with just 11 per cent for the North.
“While this reflects the sectors and growth stage supported by the fund, in order to offset this imbalance the North needs a patient capital fund to deliver both growth and decarbonisation in the recovery.
“We’ll be calling on all political parties to put forward considered, coherent proposals to close the North-South divide as we move to secure the recovery.”
A spokesperson for the bank said: “The Future Fund follows the market and initial misgivings about potential regional bias have not been borne out, with distribution to the regions tracking above levels in the equity market more generally.
“The British Business Bank’s 2019/20 Small Business Finance Markets report showed that the regions outside of London received 34 per cent of equity investment by value in 2019. Applications that met all the eligibility criteria received investment, irrespective of location.”
