Ending a 17-month wait, the British Business Bank (BBB) has launched the first wave of the Midlands Engine Investment Fund (MEIF), with an initial £120m in debt finance and loans available for small firms in the region.
The fund represents the primary financial backing for the Midlands Engine, one of the government’s key regional development initiatives in its industrial strategy.
Initially announced by former chancellor George Osborne in 2016’s Spring Budget, the Midlands Engine Investment fund suffered several setbacks, with problems in the procurement process for awarding contracts causing delays.
Now, two separate allocations are available for small business owners to access – £30m in small business loans valued from £25,000 up to £150,000, with £90m of debt finance worth £100,000 to £1.5m.
The remaining £130m of the overall pot is yet to be announced.
To deliver the fund, the BBB collaborated with the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Communities and Local Government (DCLG) and ten Local Enterprise Partnerships (LEPs) in the East and South East Midlands and West Midlands.
The MEIF covers the following LEP areas: Black Country, Coventry and Warwickshire, Greater Birmingham and Solihull, Stoke-on-Trent and Staffordshire, The Marches, and Worcestershire in the West Midlands; and Derby, Derbyshire, Nottingham and Nottinghamshire (D2N2) Greater Lincolnshire, Leicester and Leicestershire and South East Midlands.
In an official statement, communities secretary Sajid Javid said the investment fund was crucial to job and skills creation in the Midlands.
He added: “This financial support will enable local businesses to grow, move in to new markets and boost productivity.”
Meanwhile, BEIS secretary Greg Clark said funding would maintain Britain’s place as “a world leader in business and innovation”.
“This is why we want all corners of the country to experience the benefits of enterprise, growth and jobs created by new businesses,”he said.
Clark added: “The Midlands Engine Investment Fund is an important part of our modern Industrial Strategy, which will help entrepreneurs across the thriving Midlands region access the funding and support they need to start, grow and invest in their future.”
Speaking on behalf of the BBB, chief commercial officer Patrick Magee, said the fund had would perform a vital role in the Midlands’economy.
“The MEIF will play a pivotal role in plugging in the gaps currently present in the small business funding landscape, ensuring that all businesses have access to the finance they need to grow.
“Currently, younger small businesses and those looking to scale up – the very businesses that have the greatest potential for job creation – are more likely to have their applications for external finance rejected. We want to mobilise these businesses, supporting organisations of varying sizes and stages of development across the Midlands.”
The new finance opportunities for small firms based in the Midlands were announced alongside fresh research from the BBB to highlight what kind of potential the Midlands Engine Investment Fund could hope to unlock.
According to the study, 14 per cent of the UK’s high-growth businesses are based in the region, which contributes 13 per cent of the country’s total economic output.
Meanwhile, survival rates were also shown to be significantly higher in the East and West Midlands than in London, suggesting a more stable environment for startups to be based.
Midlands Engine threatens to run out of steam as concept fails to reach to founders
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