According to the British Business Bank, the Northern Powerhouse generates £350bn GDP annually, which is almost a fifth of all UK economy.
By introducing the Northern Powerhouse Investment Fund, the British Business Bank is out to stimulate growth in local SMEs by unlocking funding and investment opportunities.
The £400m pot has been created by the European Regional Development Fund, a loan from the European Investment Bank, funding from the Department for Business, Energy and Industrial Strategy and an additional loan from British Business Finance, a British Business Bank company.
Keith Morgan, CEO at British Business Bank, said: “The North of England has a long and proud history of driving global innovation and economic progress. The region has more high-growth businesses than London and, at close to one fifth of UK GDP, is larger than the economies of Greece, Denmark, Austria and Belgium.
“The region has enormous untapped economic potential that can be realised by improved funding options and opportunities. The Northern Powerhouse Investment Fund represents a co-ordinated policy approach to help realise this potential across the North.”
The Sheffield-based fund will collaborate with ten Local Enterprise Partnerships in the North West, Yorkshire and Humber and the Tees, as well as accountants, banks and other service providers to offer SMEs in the Northern Powerhouse capital. This comes after Sheffield was named the top city for UK job growth at the end of last year.
Fund managers have been appointed to control the Northern Powerhouse Investment Fund, which will have different funding brackets based on an SME’s development stage and needs:
Microfinance – £25,000-£100,000
Managed by Business Finance Solutions and MSIF, Finance for Enterprise and Business Enterprise Finance
Business loans – £100,000-£750,000
Managed by FW Capital and Enterprise Ventures
Equity finance – up to £2m
Managed by Maven Capital Partners and Enterprise Ventures
“Our efforts to build the Northern Powerhouse are delivering real results for local people, with over one million businesses involved, foreign direct investment up by a quarter and 187,000 jobs created in the past year alone,” said Andrew Percy, Northern Powerhouse minister.
“This dedicated £400m will help us go even further, supporting smaller businesses across the region to reach their full potential and helping to create an economy that works for everyone.”