Our results for 2018/19 show increased performance and delivery for the UK’s smaller businesses
Over the last five years, the British Business Bank has built a strong track record, intervening to improve finance markets for smaller UK businesses.
At the end of the last financial year, over 89,000 businesses were benefiting from £6.6bn of finance supported by the British Business Bank. As shown by the many examples in this report, our interventions apply to a wide variety of businesses of all sizes and stages – from start up businesses who received mentoring and finance from our Start Up Loans programme to high-growth scale-ups accessing, perhaps, multiple later-stage funding rounds.
In 2018/19, we increased our support for smaller businesses through our national and regional programmes, helping us to deliver successfully against our objectives:
- We made new commitments of £957m, contributing to an increase of 27% in the total stock of finance supported through our programmes.
- We provided 91.5% of our support through smaller banks, non-bank lenders, alternative lenders and equity providers, helping to improve diversity and choice.
- Our dedicated regional funds supported over £160m of finance, helping to address regional imbalances.
- We saw awareness of the Bank amongst businesses that may need finance increase from 13% to 28%.
- We provided advice and support to Government on an increasing number of cross-government projects, and published high profile, ground-breaking research into UK finance markets, including important research on gender diversity in the Venture Capital sector.
- We generated an adjusted return on capital of 3.6%, ahead of our target of 2.5%.
British Business Bank’s financial statements for the year show a net operating profit of £42.4m (before adjustment for ECF loan commitments and interest payable) and a profit before tax of £81.2m.
A growing regional impact
Our regional funds have begun to make a significant contribution to the areas they support, with the Northern Powerhouse and Midlands Engine Investment Funds providing 16% and 20% of the equity finance deals in their respective regions in 2018. We also invested for the first time in a fund wholly dedicated to businesses located in Northern Ireland. Our new UK Network, which we set up in autumn 2018, is providing valuable feedback on regional and local finance markets and promoting our information products to smaller businesses across the country.
Working across Government
The Government increasingly calls on our expertise in smaller business finance markets to help it fulfil specific policy priorities. Last year, this included support for new housebuilding through our ENABLE Guarantee programmes, and for technology to improve national security through our National Security Strategic Investment Fund. We also continue to provide input into important ongoing initiatives such as the Industrial Strategy and EU Exit planning.
Providing valuable research into markets
2018/19 was a strong year for our research and analysis of markets, with February 2019’s VC & Female Founders report in particular setting the agenda for the VC industry. In the coming year we will increase activity further, including publishing major research into export finance for smaller businesses and the feasibility of greater investment in patient capital funds by defined contribution pension schemes.
Our provision of information to smaller businesses underwent a step-change in summer 2018 when we introduced our new online Finance Hub, which encourages and enables growth businesses to find, understand and get the right source of finance they need. As a key element of our new Demand Development Unit, the Hub has quickly proved its effectiveness, with 77% of users saying they would recommend the platform.
Delivering more patient capital
Last year we put in place the last of the measures recommended by 2017’s Patient Capital Review, launching a new £500m Managed Funds Programme, a £100m Regional Angels Programme and our £2.5bn British Patient Capital (BPC) programme. BPC is already delivering strongly, and made 12 commitments totalling £333m over the year.
In 2018/19, the British Business Bank has grown rapidly, both in scope and delivery. The depth of that delivery – from the Start Up Loans programme providing £500m of loans since 2012, our Enterprise Finance Guarantee celebrating its 30,000 businesses funded milestone, to patient capital programmes to help ambitious high-growth companies become the world-class businesses of tomorrow – means we are well placed to support UK smaller businesses across every stage of development now and in the future.