UK’s B-North To Launch SMB-Only Banks Next Year

The “localized, office-based pods” as they are called will offer small business loans starting at £500,000 and going up to £5 million, as well as revolving credit facilities and buy-to-let finance. Manchester will be the location of the first B-North pod, followed by pods in Yorkshire, the Midlands and London in stage one, with another four locations planned for stage two. B-North is currently applying for a banking license.

The locations are strategic, according to the company, as the purpose of the pods is to house all the needed expertise, which would typically be centralized in a traditional banking system.

While loan requests with traditional banks can take between three and four months to be approved, B-North’s model will allow loans to be made to SMBs within 10 days through the use of cutting-edge data technology. Although local offices will be given autonomy to make lending decisions, bank officials will analyze data — including social media sentiment toward any borrower.

“Nobody likes to do things online only,” Jonathan Thompson, CEO and co-founder of B-North, said, according to Growth Business. “We see the human touch as key when making lending decisions, and we want [offices] to have that autonomy. On the other hand, we’re not shackled by legacy IT systems or legacy infrastructure.”

B-North predicts that 70 percent of its loan referrals will come via the financial broker network, with the remaining 30 percent generated from branch walk-ins. Once its banking license is approved, B-North plans to offer fixed-term bonds to private investors to raise capital to support its efforts. The startup has already raised £4.5 million in seed funding so far.

“There are 5.6 million small businesses operating in the U.K., comprising 61 percent of the U.K. workforce: that’s an integral part of the U.K. economy, which we anticipate will only increase as the U.K.’s relationship with the EU evolves and we become more reliant on ‘home-grown’ enterprise. The ‘Northern Powerhouse’ already contributes significantly and is an essential pat of the U.K.’s identity,” Thompson added.