Eye on Back to Business
DANSKE BANK: FUNDING THE RECOVERY TO HELP BUSINESSES THRIVE AGAIN By Aaron Ennis, Head of North Business Centre, Danske Bank
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ne of the major challenges businesses have had to deal with over the past 18 months is the removal of their ability to plan ahead because of the COVID-19 pandemic. Many in sectors such as hospitality and retail have been concentrating on survival and desperate to see the end of restrictions. But for a lot of others less acutely affected, the uncertainty over how and when life might return to normal has been enough to hold them back from investing in their businesses. Thankfully, as we enter the second half of 2021, we are seeing positive signs that investment activity taken off the table during the pandemic is back in play
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and companies are moving into growth mode – for example, a rise in asset finance applications for new plant and machinery. As Northern Ireland’s biggest bank, we want to see individuals and businesses in NI thrive and to give business leaders confidence that now is the right time to take steps like this. In April, Danske Bank reaffirmed its commitment to NI and the local economy by creating a £500m Business Growth fund for medium to large size businesses designed to help them push the button on growth plans. At a time when other lenders are restructuring or increasing the amounts they want companies to self-fund to
secure loans - our locally-based business teams are committed to raising funding for customers. Our £500m fund is open to both existing business customers and businesses who are currently with other banks but are open to moving their banking relationship to Danske Bank. New business customers who borrow from the fund will benefit from removal of the cost of switching through no arrangement, valuation or legal fees, as well as a 75% transactional fee discount for six months. There is evidence of a rise in demand for lending across many sectors. The engineering and manufacturing sectors are beginning to invest in growth again, with a number of Danske Bank customers making significant investments in robotics to automate processes. This investment hasn’t resulted in job losses – far from it, but rather workers being redeployed to higher level roles within the organisations. Among the trends I have noticed is significant demand for funding of professional buy-ins and buyouts across a number of sectors, including accountancy, legal, veterinary, dental, opticians and general practitioners - perhaps as a result of founders and partners viewing the end of the pandemic lockdown as the right time to take a step back. Many businesses like these have traded well at the end of the recession and in the early post-Covid phase, so are well positioned to make such a transition now. We expect further M&A activity to accelerate through the rest of this year across various sectors.
Many businesses in the convenience store sector are seeking to invest in expanded premises and product offering as the trend for more shopping locally, continues. We are also seeing significant liquidity within many businesses who availed of Government backed interventions, including the Coronavirus Business Interruption Loan Scheme and Bounce Bank Loan Scheme. While many companies who took this support for cash flow and to stay afloat are now focused on starting to pay back those debts, many other companies took the loans “just in case” and still have that money stored away for investment. While the debt hangover from CBILs and BBLs may prove challenging for some businesses, those with liquidity are seeking opportunities because they know the economy is expected to grow by around 7% this year and their own businesses should benefit. We saw agility and innovation from businesses in response to COVID-19, with businesses pivoting into new sectors and for many the new products or services they created have become a core part of their business for the longer term. Agility and innovation resonate with Danske Bank because we had to use both to operate remotely, deliver new products and still keep our branches open. The innovations that made that possible are now embedded in our own organisation. As businesses build for a new future, we will make sure the funding is there to enable such innovation to translate into growth and expansion for our customers.
