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Barclays Bank has recently announced a £500 million funding program for SMEs based in the North, an area dubbed the Northern Powerhouse. The funding is part of a wider program of investment from central Government, which was announced back in 2016. The Barclays investment scheme will make it easier for northern SMEs to create new jobs and expand.
All small and medium-sized businesses in the north are eligible for Barclay’s Bank finding. This includes start-ups and established businesses in logistics, transport, manufacturing, tech, and R&D. Eligible businesses can apply for a £250k overdraft without needing to use their property or assets as security for the loan. SMEs can also borrow up to £25K without paying any bank fees, and up to £100k unsecured. Barclays is also providing extra debt support as part of the lending initiative.
The northern powerhouse initiative
“The Northern Powerhouse is an initiative which would help the whole country to take those economic opportunities,” said Jes Staley, Barclays CEO. “As the UK prepares for Brexit, it’s vitally important that businesses, civic leaders, and government work together to make the Northern Powerhouse a reality. That means supporting entrepreneurs and businesses to succeed, but it also means providing more ways into high-quality work.”
Barclays is also opening Eagle Labs, a co-working space for start-ups. This is based in Sheffield and Newcastle and will complement existing facilities in Liverpool and Salford.
Government commitment to the northern powerhouse questionable say SMEs
Many SMEs were deeply sceptical of the government’s commitment to the Northern Powerhouse initiative when it was first announced in 2016. A study of 1,000 small businesses found that more than half didn’t believe the government would act on its promises. Many still feel the same way, but news that High Street banks are stepping up to the plate to make it easier for small and medium-sized businesses to grow and prosper could change the mood in the north.
NatWest pledges £1 billion in SME funding
The Barclays announcement is part of a push by the UK banking sector to give SMEs a helping hand to help them prepare for the challenges of Brexit. In May, NatWest made a similar announcement. It pledged an extra £1 billion to SMEs, which would help them invest in technology, R&D, and manufacturing.
Alison Rose, head of NatWest’s commercial and private banking arm, said the bank was trying to do its bit to show that it had changed since the financial crisis. She apologised for the way NatWest and its fellow banks had treated – or rather mistreated – many SMEs when the banking sector was restructured following the financial crash.
Cash flow critical for new SMEs
Extra funding is always welcome for new businesses, regardless of where they operate. Research consistently shows that more than 50% of small businesses fail in the first five years because of poor cash flow and not enough profits.
Concerns over Brexit have heightened concerns for SMEs, as many fear trading conditions will deteriorate when the UK leaves the European Union. To date, though, the UK economy has remained surprisingly resilient in the face of pressures from the EU. There were 5.7 million private sector businesses at the beginning of 2017, which is more than ever, and the combined turnover of SMEs is a staggering £1.9 trillion. SMEs contribute a huge amount to the EK economy, so it’s vital that they are able to secure funding at the right time.
Funding options for small businesses
The good news is that interest rates remain low and funding is relatively easy to come by when your business is ready to expand. The main funding options for small businesses are:
Business loans – the most obvious source of business funding is to apply for a small loan. You can either approach your local bank and ask for a loan or shop around for a suitable product from one of many lenders. Self-employed or sub-contractors with poor credit don’t have to worry either. There are eligible for loans from a direct loan lender such as Everyday Loans.
Credit Cards – if you don’t need a huge sum of money, it can be worth using a business credit card to buy tools and equipment to boost your business, but remember, the interest rate on a credit card is higher than a bank loan.
Grants – look around to see if your business qualifies for any grants or funding. This is generally free money, so it’s worth your time applying if you are eligible.
Crowdfunding – another popular option is to use a crowdfunding site such as Kickstarter or GoFundMe to ask people to invest in your business. You will need to create a compelling profile explaining why people should give you money, and you may have to offer shares in the business. But, if your business case is attractive, there is plenty of money out there.
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