Boosting business in the region

Since its launch in 2017, the Midlands Engine Investment Fund has made an effective impact on the region’s small business finance landscape.

The £250 million fund was launched by the British Business Bank to support small businesses in the Midlands, and it has since invested millions of pounds in a wide variety of companies, creating several hundred jobs in the process. 

To gauge the full impact of the MEIF on the region, its Early Assessment Report is perhaps the best place to start.

Released at the end of May, the headline figure was £64 million – the amount invested by the MEIF into some 257 businesses across the Midlands.

That statistic alone suggests the fund is succeeding in its mission: to improve the finance landscape for small businesses in the Midlands, a region whose access-to-finance opportunities have been weaker than other parts of the UK.

Moreover, it has helped to create 629 jobs, with 37% paying above the UK upper quartile salary of £36,500 a year.

The Early Assessment Report data charts the MEIF’s progress between August 2017 and September 2019. 

The report found that the reasons for setting up the MEIF remain robust and highly relevant, spotlighting its impact in improving the delivery of equity finance in the Midlands after supporting 20% of all equity deals in the region. 

Patrick Magee, chief commercial officer at the British Business Bank, said: “The last few months have not been easy for small businesses in the UK. This includes the Midlands, where the British Business Bank has already identified a gap in the provision of SME finance. 

“This new report, however, reveals that through the MEIF we are making a positive difference, with the region’s businesses accessing investment to develop innovative products, hire and upskill staff, and most importantly grow. 

“The MEIF is key to driving forward the Midlands Engine economy. We are committed to building on the fund’s progress and sustaining strong levels of support; the bank is also operating a range of other initiatives to enable businesses to access finance at this time.” 

Key findings from the report

90% of researched investee businesses confirmed that the additional equity funding they raised was either ‘entirely’ or ‘largely’ attributable to the MEIF

60% of investee businesses report increased turnover

58% of businesses receiving debt and 30% securing equity identified as exporting products or services. This is in contrast to national export estimates varying from 9% to 20% for all SMEs 

68% of businesses had used investment to increase skills in their workforces

Across debt and equity deals, 37% of businesses stated that  they would either ‘probably not’ or ‘definitely not’ have secured finance without the fund

84% of businesses revealed they now have greater confidence in raising private sector finance

85% of equity deals and 44% of debt funding was used to increase investment in research and development and innovation, leading to new products to be developed, including medicines and medical therapies

CBILS and MEIF funds

The British Business Bank is clear that the MEIF is committed to continuing to invest in small businesses across the Midlands, despite the wider commercial turmoil caused by COVID-19 crisis.

By way of an example, a Black Country-based designer and manufacturer of power supply units and battery charging systems is one of the latest businesses to secure a funding boost.

 PSU Designs, which has a large design and manufacturing facility in West Bromwich, secured an £85,000 investment from BCRS Business Loans via the MEIF with a CBILS backed guarantee.

 The fund also recently supported a £1.2 million funding round for Coventry-based Sarissa Biomedical which has developed a potentially lifesaving device for diagnosing strokes.  

Jon Corbett, chair of MEIF’s Strategic Oversight Board, said: “Through our seven fund managers, a strong network of LEPs and intermediaries, we continue to foster a real sense of regional collaboration. 

“This has been pivotal to the impact the fund has made across the Midlands, it will continue to play an important role as the MEIF remains very much open for investment during these unprecedented times.”

The FSE Group

Earlier in the year the MEIF appointed a new fund manager – The FSE Group – making £40 million available to invest in the region’s small businesses. 

The FSE Group is one of the three aforementioned fund managers that has now also received the accreditation to issue loans from the MEIF Debt Fund backed by a CBILS guarantee. 

Forming the latest phase of investment released by the MEIF, the £40 million of debt finance brings the number of MEIF funds to eight, with The FSE Group set to work alongside six existing fund managers.

The additional MEIF money provides loan funding between £100,000 and £1.5 million to small and medium enterprises based across the whole of the Midlands, to facilitate growth.

Following the launch of the new £40 million MEIF Debt Fund, The FSE Group has also revealed the team managing it.

It will be led by Andy Moss, who came to FSE from Lloyds, where he has spent more than 34 years building a strong network in the finance community across the Midlands. He has led teams across the SME sector, where he specialised in manufacturing and for the last three years has worked with large corporates.

“The FSE Group is a niche lender with a unique approach, focusing on business potential, rather than security available, to help growing businesses reach their full potential,” said Andy.

“I am excited to be part of this dynamic team and look forward to leading the successful delivery of this latest MEIF funding.”

Meanwhile Grant Peggie, director at the British Business Bank, welcomed the appointments.

He said: “It is great to see The FSE Group has a full MEIF team in place, headed up by Andy, who we look forward to working with. MEIF is still very much open for business, especially at a time when firms are reaching out even more for financial support. 

“We are pleased that The FSE Group also now joins our other regional fund managers, BCRS Business Loans and First Enterprise as an accredited lender under the Coronavirus Business Interruption Loans Scheme.”

Pictured: Patrick Magee

*This advertisement feature appears in the Access to Finance special report in the June/July 2020 issue of Birmingham Business