60 second interview: Keith Morgan, British Business Bank

Posted on 9 Oct 2015 by The Manufacturer

The Manufacturer catches up with Keith Morgan, CEO of the British Business Bank.

What was the idea behind setting up the British Business Bank?

Keith Morgan, CEO, British Business Bank.
Keith Morgan, CEO, British Business Bank.

The British Business Bank was established under the last coalition government at around about the end of 2012. The idea was to create a state-owned development bank focused on small businesses.

Quite simply, the idea behind the British Business Bank is to create a financial institution which serves the needs of those small businesses and does that by working through the marketplace.

What kind of finance partners do you work with to access the marketplace?

We purposely have not set ourselves up in competition with the marketplace. Instead we prefer to leverage the reach and the resources and funding of people in the marketplace by bringing our solutions to the small business through our finance partners. We work through more than 80 different partners.

Why so many partners?

We want to make sure we touch all the right points in the market. Often small businesses can find getting the first piece of finance from a bank quite difficult.

In this area we work through a startup loan company offering startup loans between £5,000 and £25,000 to people who quite simply want to be their own boss.

British Business Bank PQ Oct 2015Further up the development cycle you get into areas where small businesses are established and might have really good high growth potential. They’ve got an innovative idea and they want to prove that idea, create the product or service and bring it to market.

That’s where you need to have much larger amounts of funding and usually because you’re at a risky end of financing that form of funding comes in the form of equity.

There we will work through the Angel co fund and we also work through venture capital funds with the private sector. We’re prepared to be a long term investor.

How has the small business market changed since the British Business Bank was established?

We’ve seen some important changes since 2012. There was a period of time during and after the recession when small businesses were very focused on managing their own balance sheets.

Refinancing on the cards for Luxfer
There was a period of time during and after the recession when small businesses were very focused on managing their own balance sheets.

People were quite keen to make sure they didn’t have too much debt themselves, they wanted to be sustainable, or even self-sustainable in terms of finance. We’ve had more confidence returning to the market and more small businesses are forecasting that they intend to grow.

With that comes a change in how they want to use finance. In 2012 a lot of small businesses were focused on working capital, now that’s changed and the biggest use for finance is for buying new productive assets or for business expansion.

What kind of business advice and support do you offer?

We take a two pronged approach. When we sign up a financial partner, we do so because we have conducted our due diligence and are satisfied they’ve got all of the expertise and the sound processes to deliver the support that we want to offer.

International finance
The biggest current use for finance seems to be buying new productive assets or for business expansion.

But we also believe there’s a role to play in bringing together some of the many different voices in the market place around the provision of greater and better information for small businesses.

Just over a year ago we put together the Business Finance Guide, which helps businesses understand which types of finance is most appropriate to the situation they’re in and then direct and sign post people to the point where they can get that that finance.

We did that together with the Institute of Chartered Accountants in England and Wales. We also brought together roughly 17 other partners including the Federation of Small Businesses; the British Chamber of Commerce; the CBI, and the IOD, and the big banks behind them so that what we can try and form a common set of information, a single fact base that small business can appeal to.