Mercia Business Loans has deployed more than £20m to 55 businesses across the North of England since the £660m Northern Powerhouse Investment Fund II launched, with the majority of recipients based in Yorkshire and the Humber.
The milestone covers roughly two years of lending from the debt portion of NPIF II, the British Business Bank programme that succeeded the original Northern Powerhouse Investment Fund. Mercia manages part of that mandate alongside other appointed fund managers.
The structure is worth noting for founders weighing their options. NPIF II writes loans from £25,000 to £2m and equity cheques of up to £5m. The debt route leaves the cap table untouched, which is the point for the profitable, asset-backed SMEs that make up much of the North's business base.
Uses of the money have been conventional growth finance rather than venture: working capital, new equipment and technology, larger premises, additional sites, and management buyouts.
That last category is the most interesting line in the announcement. Pete Sorsby, fund principal at Mercia Business Loans, said hard trading conditions are themselves generating buyout opportunities as incumbent management decide to step back, creating deals for younger teams that banks will not always underwrite.
Recent recipients span consumer and industrial. Sheffield-based Play Padel is opening a second club in the city and Leeds coffee business North Star Coffee Roasters is expanding in the city centre. In Wakefield, family-run Land of Furniture used the funding to buy its premises, while Hull's GW Power-Safe has opened a new headquarters for its renewable energy work.
East Yorkshire Hydraulics drew on the fund to pursue growth following a management buyout, and indoor climbing operator Freeklime, which runs centres in Huddersfield and York, has expanded into Lincoln.
Sorsby said demand for finance has risen in recent months as business confidence improves, though trading conditions remain difficult. He framed the fund as filling a gap rather than competing with the banks: mainstream lenders are active, but hard credit policies exclude smaller firms that fail to tick the right boxes, and Mercia will either lend where banks cannot or top up what they provide.
Sarah Newbould, senior investment manager at the British Business Bank, said the milestone reflects the fund's role in helping northern businesses invest and grow.
The £20m figure sits alongside a broader push of state-backed capital into the region. The British Business Bank added £80m to PXN's NPIF II equity fund earlier this month, taking it to £180m, and a further £150m of British Business Bank capital was directed towards northern scale-ups last week.
Original source: Bdaily — https://bdaily.co.uk/articles/2026/09/13/mercia-passes-20-million-lending-milestone
