The British Business Bank has launched a £660 million investment fund for small businesses across the north of England.
The plan behind the Northern Powerhouse Investment Fund II is to increase the supply and diversity of early-stage finance for smaller businesses in the region, providing funds to firms that might otherwise not receive investment, and help to break down barriers in access to finance.
Providing loans of between £25,000 and £2 million, along with equity investment of up to £5 million, the fund will continue to invest in companies operating within the North West, Yorkshire and the Humber, and Tees Valley, and will now include the whole of the North East.
The investment scheme builds on a fund launched in 2017 that's seen more than £1 billion of direct and private sector co-investment in local businesses.
"The success of the first Northern Powerhouse Investment Fund has proven the instrumental change that access to finance can have for small businesses,” said Louis Taylor, chief executive of the British Business Bank.
“From creating hundreds of jobs to developing ground-breaking products, we have seen companies that previously lacked funding options accelerate forward in their growth journeys, which has ultimately benefitted the whole of the Northern economy.
"This is why it was important to continue the Northern Powerhouse Investment Fund into its next phase. With further funding available, and a greater geographical reach in the North East, the Northern Powerhouse Investment Fund II will engage more stakeholders across the regions, bringing the business community closer together to create more opportunities for entrepreneurs everywhere."
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One company to have benefited from the first fund is Nova Pangaea Technologies (NPT), a Teesside-based cleantech company that has created a new process to convert wood residues and agricultural waste into biofuels which are then used to produce sustainable aviation fuel.
With £2.3 million funding 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's now on track to deliver its first commercial plant.
"The Northern Powerhouse Investment Fund’s involvement is one of the key reasons as to why we are in the strong position we are in today. Our NPIF fund manager was willing and able to look deeper into our business and it was clear that the Fund was committed to empowering a Northern business dedicated to offering climate solutions," said NPT CEO Sarah Ellerby.
"Since the fund’s involvement, we’re 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 across the various districts, and the British Business Bank will hold a series of roadshows for small business finance intermediaries across the region.
"This new fund will unlock millions in equity and loans for SMEs across the North to realise their full potential and builds upon British Business Bank’s vital work ensuring that any small business owner in the UK can scale up and grow," said Kevin Hollinrake, minister of state for enterprise, markets, and small business.
"SMEs are the engines of growth for our economy and across government we are improving access to finance, cutting red tape and removing barriers to ensure that they can go further and faster than ever before."
