EU Exit Business Readiness Forum: Information for businesses on a no - PowerPoint PPT Presentation

EU Exit Business Readiness Forum: Information for businesses on a no deal exit from the EU Thursday 11th April 2019 These slides reflect government policy as of 11th April 2019

Objectives for these forums Share the key information businesses need to prepare for Exit Provide you with materials to cascade to your network of members Respond to your questions and gather your feedback 1

Agenda for today 1 Welcome and Introductions 5 mins 2 Parliamentary Update 10 mins Access to finance and the 3 20 mins British Business Bank 4 Q&A/AOB 10 mins 2

Agenda for today 1 Welcome and Introductions 5 mins 2 Parliamentary Update 10 mins Access to finance and the 3 20 mins British Business Bank 4 Q&A/AOB 10 mins 3

Agenda for today 1 Welcome and Introductions 5 mins 2 Parliamentary Update 10 mins Access to finance and the 3 20 mins British Business Bank 4 Q&A/AOB 10 mins 4

Access to Finance and the British Business Bank Francis Evans Head of Business Finance Thursday 11th April 2019 These slides reflect government policy as of 11th April 2019

Access to Finance • Our objective is to ensure that all businesses have access to the finance they need to start, grow and stay ahead • This includes debt, equity and asset finance • We focus on ensuring informed demand as well as adequate supply for each stage of growth, from start-up loans to long-term equity investment (patient capital) • Our key partners are the British Business Bank (BBB) which is the UK’s development bank, and UK Finance which represents banks and other finance providers 6

SME Finance Markets – a story of subdued demand • Use of external finance (of any kind) stands at 34% for all SMEs, rising to 77% for those with 50-249 employees • 48% of all SMEs are ‘permanent non - borrowers’ (PNBs) • PNBs are as profitable as other businesses, though less innovative and less likely to be planning to grow • 73% of all SMEs would prefer not to borrow, even if this meant foregoing a growth opportunity • The cash balances of SMEs outweigh their borrowing by 2:1 7

SME Finance Monitor shows the drop in demand… 8

…and high chance of success for established SMEs 9

The UK’s banks are transformed since 2007 Chart shows Tier 1 capital ratio of UK’s 7 largest banks 10

Market gaps (and actions) • New businesses find it harder to borrow (Start Up Loans) • Less established businesses with little collateral also find it hard to borrow (Enterprise Finance Guarantee) • SME lending is highly concentrated (ENABLE programme for smaller providers, including asset finance) • Equity finance is harder to obtain and the fund sizes are smaller than in the US (BBB equity programmes) • There is a disparity between London and other regions (Debt + equity funds in the Midlands, North & Cornwall) 11

The British Business Bank (BBB) is the UK’s domestic development bank • Provides SME financial products, debt and equity Wholesale – A plc – 100% work with • Focused on smaller UK owned by UK 100+ companies (<250 staff) Government partners • Market led, commercially minded, profits go to HMG 12

The BBB’s six objectives (we added two in 2018) REDUCE IMBALANCES ACROSS THE UK in access to finance for smaller businesses, including identifying gaps CENTRE OF taxpayers’ resources EXPERTISE efficiently within a robust risk on smaller business finance for management Government framework 13

Performance against objectives 14

The BBB is established as the second-largest investor into UK venture capital funds Six largest investors into UK VC funds 2010-2018, £m UK accounts for ~50% of EIF’s total investment in European VC 822 498 138 131 84 50 EIF BBB West Midlands Singapore Sovereign Pension Fund Wealth Fund 15

Where do individual businesses find information? • Potential impacts: EU Exit portal https://euexit.campaign.gov.uk/ • Understanding options: the Finance Hub (BBB) https://www.british-business-bank.co.uk/finance-hub/ • Planning and applying: Let’s talk business (UK Finance) https://www.ukfinance.org.uk/policy-and- guidance/guidance/lets-talk-business • Access to finance: via individual providers 16

“Let’s talk business” headings 17

Questions? francis.evans@beis.gov.uk Useful searches: ‘SME Finance Monitor’ ‘Small Business Finance Markets 2019’ ‘UK Finance SME Lending’ 18

Agenda for today 1 Welcome and Introductions 5 mins 2 Parliamentary Update 10 mins Access to finance and the 3 20 mins British Business Bank 4 Q&A/AOB 10 mins 19

You may have further questions on these and other issues. Please visit gov.uk/euexit for more information If you have questions about the EU Exit Business Readiness forum, please contact sed@beis.gov.uk 20