From the top · 8 January 2016

Keith Morgan: The man at the helm of the government’s SME finance schemes

Keith Morgan worked for UKFI,  Banco Santander and L.E.K. Consulting before joining the BBB
Keith Morgan worked for UKFI, Banco Santander and L.E.K. Consulting before joining the BBB
As the CEO of the British Business Bank, Keith Morgan is responsible for crucial business funding initiatives such as Start Up Loans and the Angel CoFund. As Business Advice found out, he has big plans for opening up the finance market.

Straight off the bat Morgan began by explaining that the British Business Bank (BBB), the brainchild of former business secretary Vince Cable, is there to fill some of the gaps that wouldnt be plugged if the private sector was working by itself.

By working with the private sector, and other players in the market, he believes the BBB is able to create conditions meaningbusinesses willbe more likely to secure the finance needed.

Such is the influence of Morgan and the BBB, we have included him in our maiden Small Business Decision Makers list a definitive collection of people we think all micro and small business owners need to know about.

if you see what has happened in the small business finance market during the last few years, first we went through a recession and then a recovery. Since then, there have been some important changes in availability of finance, he added.

He pointed to developments such as the increase in bank finance as one particular area of interest, but still believes there are big issues to address.

it is still the case that if you are a smaller business, or one without a track record and particularly with big ambitious growth plans, then it’s difficult for that company to get the finance it wants. We see that in success rates when people go to the bank and ask for a loan.

To assist businesses at different stages of the growth cycle, the BBB has broken itself down into three components: Start Up, Scale Up and Stay Ahead. Under each of these three banners lie different government funding schemes, from the Start Up Loan scheme at the beginning to debt funds later on.

The BBB is 100 per cent owned by the government, but independently managed by people like Morgan born and bred private sector workers who have gained crucial experience of what roadblocks exist in the SMEfinance markets.

The Start Up Loans scheme is one of its most expansive, and typically offers loans of about 6, 000 but they do go up to 25, 000. Morgan described it as a way of securing money that might have come from friends and family but would not have been offered by banks.

Once an aspiring entrepreneur has secured a loan, they pay a six per cent interest rate and get access to a business mentor to help them through the first stages of growing their company. To date, 35, 000 loans have been granted through the scheme generating some inspiring success stories.

the thing you have to realise about Start Up Loans is thatnot every one will be successful, Morgan went on to say. The loan is there to encourage people to take that extra initiative and a little bit of risk. But these loans, which do create companies, have seen some grow from a single-person organisation to those employing more than ten people.

Funding lifecycle

Part of what is interesting about the BBB is that as a business which takes on Start Up Loans capital grows, it then encounters new funding requirements. Rather than having to go to a new source, a business can once again tap up the BBB for an alternative.

While historical funding initiatives such as the Enterprise Finance Guarantee scheme, Regional Growth Fund and Angel CoFund have been relatively successful, a long-held argument has been that each are too disparate and don’t talk to each other.

Having been brought together under the BBB umbrella, businesses can talk to the same organisation whether it is securing a small loan to get going or then lend against IP once it has has some momentum.



Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.