Lancashire Times
A Voice of the North
10:15 AM 19th July 2021

Demand For Debt Finance On The Rise In The North West

Almost nine in 10 (89%) of small business finance advisors in the North West say that additional debt finance will be required by smaller businesses as a result of the Covid-19 pandemic, according to a new study from Ipsos MORI and the British Business Bank, published today. Demand for finance in the region is seen as strong across all smaller businesses in development stages.

The survey looked at the regional advisory communities, including accountants, lawyers and business advisors, perceptions of demand and supply of finance, and how well it is working for the smaller business community.

Beyond exploring the advisory community’s predictions over the most popular types of finance in the coming months, around half (52%)of participants believed that demand for finance outweighs supply in the region. The greatest demand in the region is seen to be coming from smaller businesses ‘surviving uncertain times’ and those scaling up according to the study, standing at 95% and 84% respectively.

While debt finance is predicted to be the highest in demand from smaller businesses, growth and early-stage equity finance are also seen to be closely in demand over the next 12-18 months, at 77% and 74% respectively, as a result of the Covid-19 pandemic.

Respondents in the North West were more likely than the UK average to think the supply of equity finance across the development stages would increase over the next 12-18months. The Bank’s Small Business Equity Tracker published last month found that the North West was the most active region for British Business Bank equity investments outside of London last year.

Despite the strong demand for finance in the region, intermediaries in the North West said a perceived lack of awareness of finance options available (66%), access to the supply of finance (55%) and an aversion to taking on finance (44%) are the main barriers to demand for finance among smaller businesses in the region since March 2020, aside from the Covid-19 pandemic. These findings were in line with the results across the UK.

Dr Sophie Dale-Black, UK Network Director, North of England at British Business Bank, said: “Moving out of the pandemic, it is pleasing to see that the demand for finance from smaller businesses is expected to remain strong in the North West as we look towards a period of recovery and growth.

“We know that debt finance is in high demand, and in turn supporting smaller businesses manage existing and new debt is an important priority. To help, we’ve created our ‘Dealing with debt’ online hub – an impartial information resource for business owners. For businesses who took out a Bounce Back Loan, the Pay As You Grow (PAYG) scheme is also in place ready to support with repayment options.

“At the British Business Bank, we are committed to not only making finance markets work for smaller businesses, but also ensuring that they are well-equipped with knowledge to make the right decisions when it comes to exploring finance options.”