Challenger debt providers add voice to calls for financial revolution in North
New challenger debt providers also need to step up and provide a solution to the difficulties businesses face in raising debt and equity funding in order to provide a richer range of funding for ambitious businesses in the North.
Speaking in response to TheBusinessDesk.com’s reporting on the damning report from the Treasury Select Committee in July, Gary Davison founder of TDC said he set his business up in order to address the problem.
Davison said: “It has become increasingly difficult for regional SMEs to attract funding from London-based investors. It was with this in mind that we founded TDC in 2015 to meet the needs of regional SMEs by an investor situated in Manchester who was consistently focused on such businesses.
“As TDC has developed it has made a specific commitment to SMEs in the Northern region who cannot obtain debt or equity funding from traditional sources, despite being good businesses with strong management teams and visions. It is the success and development of these businesses that ultimately stimulates economic growth within their local communities through job creation and regional economic wealth enhancement.
“Our Impact Fund I had a 1st close at £40m (and is targeting a final close in Autumn) and specifically targets SME’s across the Northern region with a strong track record and ambitious vision for growth. We have so far invested £20m across 4 businesses and have a strong pipeline of deals currently being assessed. With a continued commitment from our Impact Investors to supporting SMEs across the North, we expect to raise further funds to be deployed across the region over the coming years.”
Ben Barbanel, Head of Debt Finance at OakNorth Bank, said the ethos their bank was also to step in where ‘fairweather’ friends abandon small and medium sized businesses.
“The UK’s Missing Middle continues to be the backbone of our economy so powering their growth ambitions is essential for enabling the country to overcome the current economic challenges,” he said.
“Unfortunately, as we have seen in previous economic downturns, incumbent banks and alternative lenders tend to behave more like fair-weather friends, only supporting customers in the good times and retrenching in the bad. We therefore see it as an opportunity to step up to the plate and support businesses at a time when others may be unwilling or unable to. With the current cost-of-living crisis set to continue well into next year, we want to reassure businesses that we’re here to support them whether they need debt for growth, M&A, a management buy-out or buy-in, working capital or anything else.”
Neil Rudge, Head of Enterprise at Shawbrook, which has been linked with a merger with Co-op Bank, said: “For businesses seeking capital in the planning phase, flexibility remains a key priority to ensure sufficient manoeuvrability in uncertain times. We continue to see increased demand for specialist solutions such as asset-based lending and leveraged debt which allow SMEs room to operate as conditions change.”
