How to access the funding you need for business growth

Regardless of size or stage of development, businesses need funding to scale to the next level, but accessing finance has long been a challenge for Northern Ireland firms.

That’s partly because years of economic uncertainty has left the banking industry risk averse and reluctant to lend to small businesses in particular. Patrick Dewar, Corporate Finance Executive at Invest Northern Ireland, explains Access to Finance support. 

Against that backdrop, Invest NI stepped in to fill the funding void by launching a suite of funds under the banner Access to Finance. The funding pot currently amounts to almost £170m and is spread over three loan funds and two equity funds offering a deal size range of between £10k and £2m.
 

The funds operate on a fully commercial basis and are managed by local, independent, FCA-approved fund managers.

For smaller companies the NI Small Business Loan Fund, delivered by Ulster Community Finance, offers unsecured loans of between 10k and £100k and since 2018 has provided £6.6m to 211 businesses. 

The Growth Loan Fund II operates in the £100k–£500k range and is designed to support export-focused companies demonstrating strong growth potential. Larger loans with more flexible repayment terms are available under the Growth Finance Fund, which can lend up to £2m.

Both these growth funds are managed by WhiteRock Finance and part financed by the European Regional Development Fund. Combined, they have provided finance of £51m to 72 businesses with leverage of £58m.

To be eligible for loans, businesses must show that they are unable to attain all the funding they need from private providers.

On the equity side, Invest NI has sought to develop the Northern Ireland venture capital space over the past twenty years. Things are improving with increasing numbers of investors from outside Northern Ireland making larger investments in local companies. Key to that improvement has been the Techstart NI collection of funds, delivered by Techstart Ventures, which include a Proof of Concept fund and an equity fund aimed at early-stage innovative companies and entrepreneurs. 

The Proof of Concept fund offers grants on a competitive basis, and so far it has awarded some £8m to over 400 Northern Ireland businesses. The Techstart equity fund can make initial investments, in tech-related companies, of between £50k and £750k with the ability to invest up to £2m over a series of rounds.  Techstart has invested around £30m in 83 Northern Ireland small and medium-sized companies. This investment leveraged a further £140m of which £110m was from investors outside Northern Ireland.

Finally, the Co-Investment Fund, which invests alongside business angels and other private investors on equal commercial terms and is delivered by Clarendon Fund Managers, can participate in funding rounds between £150k and £1m and up to £2m over a series. This fund has invested some £44m in 103 companies with total leverage of £237m.

Ambitious businesses looking for finance can benefit from our Access to Finance funds but may be unsure where to start. Invest NI staff can help by sitting down with them to explore the options and determine which fund might be the best fit for them. The experienced fund managers will also offer guidance to help companies develop strategies and unlock the full potential of their business.

To help companies find out what’s available to them Invest NI recently co-hosted the annual Funding Growth: Explore Your Options conference with British Business Bank and InterTradeIreland. It aimed to demystify external finance for smaller businesses and raise awareness of finance options beyond traditional bank finance. Attendees were able to hear how Access to Finance has helped other businesses and what it could do for them.

Among the companies that have benefited from Access to Finance is asbestos consultancy company, Iota, which got assistance through the Small Business Loan Fund, obtaining finance to purchase specialist equipment and expand its premises. This investment helped the company grow sales in the UK and further afield. Conveyortek, a local manufacturing business, had difficulty accessing bank funding, however, they were able to get the funding they needed to expand into America, Australia and Europe through the Growth Loan Fund.

Datactics, which specialises in business user data quality and matching technology, has used a range of funding supports over several years. Most recently the company raised £2m in growth equity partly funded through Co-Fund II to help with product development and business acceleration. Meanwhile, when animation company Humain was starting up it searched far and wide for funding before finding it through TechStart. The funding enabled the company to build its team and gave it the confidence to pursue projects with big names in the industry.

SMEs are the backbone of our economy providing approximately three quarters of all private sector jobs and turnover. Invest NI recognises the importance of the loan and equity funds in supporting companies and helping deliver on the Department for the Economy’s 10X vision.

As the existing Access to Finance funds near the end of their investment period, we are carrying out market assessments to determine the need for successor funds to ensure that local businesses can get the funding they need.

We encourage any growth or export-focused SME that is trying to obtain finance to contact our fund managers.