‘A huge year’: How Virgin Money is helping local businesses grow

We spoke to Ian Hardman, head of strategic finance – North West, at Virgin Money, who looked back at a significant year for the funder – and forward to the year ahead.

Can you give me a round-up of how 2024 was for Virgin Money?
2024 was a huge year for Virgin Money. The acquisition of the business by Nationwide completed in early October and we enter the New Year as part of UK’s largest mutual. We are excited to be able to demonstrate how a mutual-owned business bank can support growth of regional businesses and regional economies. Virgin Money Business Banking grew lending by 7% during 2024, providing £2.9 billion of new lending to support UK businesses. The North West region grew by 8%, our second consecutive year of very strong growth, and we intend to continue growing in future.

What trends came to the fore last year and will they continue into 2025?
Undoubtedly 2024 was another challenging year to be running a business. We are seeing significant social, political and economic change which creates some uncertainties and continued challenging headwinds. Despite this, there remain opportunities for strong and well-run businesses to invest, acquire and grow as evidenced through the volume of new lending we provided last year. We anticipate that 2025 will be similar theme. In our regions we have experienced teams and our ethos is to build close relationships with customers so we can support them through the economic cycles.

Was business growth stymied somewhat by the Election and Budget?
The number of elections across the globe last year certainly impacted business, as they create some macro uncertainties and that never makes running or investing in a business easier. In the UK, there was an expectation that CGT may be the biggest talking point, however the National Insurance increase has created some extra, possibly less foreseen cost challenges for business that are still being fully worked through. People and skills have been highlighted as a leading issue for many businesses for a number of years and the higher costs of employing people won’t make this any easier.

How is dealmaking activity in your region – and how are you supporting it?
We support businesses with finance for working capital, capital expenditure and change of ownership transactions across SME and Corporate markets. Deals can be asset backed or cash flow based, with or without sponsors. We excel when we are helping a business to achieve some form of change, and we like to get to know that business in detail and work out a tailored way of assisting. We saw demand in all these areas across 2024, although there was some cyclicality of course, and as we enter 2025, the North West pipeline is strong particularly in the Corporate and Acquisition markets with a number of deals progressing well towards completion in Q1.  In SME markets we are seeing some evidence of owners showing some caution in progressing investment plans.

What opportunities and challenges lie ahead for growing businesses in 2025?
Expectations are that inflation and interest rates will fall which should help businesses, but Bank of England forecasts show GDP growth will continue to be modest at c1%. This shows growth will be hard earned. In recent years, we have seen differing performance even within the same sectors, commonly where the strongest businesses have got stronger and those struggling continuing to find this harder. Strength of management team is often the differentiating factor, and there has been the opportunity to increase experience and showcase management strength as businesses navigate the less certain environment. We expect this to continue in 2025. We also expect to see an increase in change of ownership transactions in 2025. We know that many owners have delayed an exit from a business due to the economic climate. It’s likely more will now progress and it feels there is an appetite from investors and other businesses to increase the level of acquisitions, with the potential for a higher level of consolidation in some sectors

How can Virgin Money support mid-market businesses?
We feel a responsibility to help local businesses grow and in doing so support the growth of our regional economies. Lending will be the key driver of this and we have the appetite to continue the strong growth evidenced over the last two years. We can also support business owners by sharing the knowledge and experience of our people as they work alongside businesses as a partner. Our local Relationship Directors work with product specialists in international trade, foreign exchange, interest rate management, asset finance, asset based lending and merchant acquiring – so we can provide integrated solutions for businesses of all sizes and all needs.