Four in 10 businesses used external finance in 2021, but regional disparities remain when it comes to finding funding solutions.
According to the first annual Regions and Nations Tracker by the British Business Bank, businesses based in London, the South East and the North West and East of England are most likely to benefit from external funding.
These regions claimed 86 per cent of all equity deals and 69 per cent of private debt investment in 2021, despite being home to just 55 per cent of the UK’s businesses.
By contrast, Yorkshire and the Humber accounts for just 1.5 per cent of equity investment and 4.9 per cent of private debt activity, despite hosting 7.2 per cent of the business population.
Meanwhile, businesses based in London accounted for 62 per cent of equity investment and 35 per cent of private debt investment, despite only having 19 per cent of the UK’s small- and medium-sized enterprise (SME) population.
“The lower flows of finance in certain regions and localities reflect a population of businesses operating with fewer choices,” said Catherine Lewis La Torre, chief executive of British Business Bank.
“These gaps in growth finance are undoubtedly holding back ambitious entrepreneurs and lead to wasted economic potential. This is something the British Business Bank is committed to changing.”
The report went on to highlight equity finance and private debt as a key support for high-growth companies across the UK.
The British Business Bank concluded that investors with a local presence are critical to the success of UK equity ecosystems, and pledged to take action to support more local funding initiatives.