George Osborne has announced his desire to make Greater Manchester a “Northern Powerhouse”.
As part of the conservative’s latest step to boost the Northern economy, the 10 authorities making up Greater Manchester will invest £32 million directly into the region’s small businesses through a peer-to-peer lender. Osborne also announced that Manchester will get their own elected mayor with powers over transport, housing, planning and policing.
The Greater Manchester Combined Authority (GMCA) has partnered with MarketInvoice as part of government plans to fuel growth and job creation in the north of England. The government has previous experience in working with MarketInvoice; in 2013 the British Business Bank invested £40 million in British businesses through the platform.
MarketInvoice allows small businesses to sell their long-dated invoices directly to investors. This means businesses can release money that is otherwise tied-up for 30 to 120 days. The investors now include the GMCA who will buy up to 50% of all invoices traded by local companies on MarketInvoice. The British Business Bank will take the next 25%, and the remaining 25% will be available to private investors.
Funds on MarketInvoice are recycled every 45 days and this will result in the £2 million deployment equating to around £16 million of investment in Manchester buisnesses every year.
MarketInvoice recently opened a new office in Manchester, making it the first peer-to-peer lender to expand into the North West.
“Businesses looking to take advantage of the fast growing economy can use MarketInvoice as rocket fuel to propel them forwards. Greater Manchester is a hotbed of business opportunity right now, and it’s great that the GMCA is taking an active role in accelerating the success of the region’s businesses.
“ This investment in Greater Manchester businesses from one of the country’s most forward thinking Authorities sits alongside private sector funds representing a great example of public and private sectors working together for the benefit of the economy.
“Together we can help make Manchester a northern powerhouse.”
Council leader Sir Richard Leese CBE has commented:
“MarketInvoice is leading an innovative group of new, online business finance providers. This partnership enables the GMCA to put money straight into fast growing local businesses. We’ve seen how this kind of working capital finance can be a catalyst for creating new jobs, exporting into new markets, and growing successful businesses, so we’re excited to be a part of it.
“Our funding will be placed directly into local businesses, helping to ensure Greater Manchester businesses - and the region as a whole - can capitalise on the growing economy.”
Mike Blackburn, chair of the GM LEP added:
“This investment offers a unique way for the combined authority to contribute to the prosperity of a multitude of Greater Manchester-based businesses.
“By releasing monies that would otherwise be tied-up in the short-term, it will allow quicker access to available finance - through its very online nature – and directly support local growth and job creation.”
Invoice financing is booming in Britain, it has the largest invoice market in the world with invoice assignment levels at £275 billion. This growth of market invoicing can be attributed to the negative culture of the bank’s policies in lending to SMEs for working capital. UK banks now need hard collateral to underpin their lending to businesses, but many SMEs cannot do this, as they don’t have the assets or are not prepared to offer them for security.
Partnerships are becoming increasingly common in the peer-to-peer space. Just last week ArchOver announced collaboration with The British Chambers of Commerce. The government is beginning to see the potential in P2P lending. They are utilising this sector to achieve their goal of increasing lending to small businesses in order to stimulate the economy. And this investment by Greater Manchester should prove how effective this policy can be.