Lending criteria
Are you are an established SME in the North and Midlands looking for funding from £100,000 to £2million? Then Mercia Business Loans could help.
- North and Midlands based
- Established & growing SMEs
- Loans between £100,000 - £2million
- Case-by-case decisions
- Largely sector agnostic
Start with the numbers
92
SMEs funded
£ 36 m
Deployed to date (September 2026)
£ 366 k
Average loan size
£ 18.8 m
Co-investment attracted alongside NPIF II & MEIF II investment
Investment for your next stage of growth
Growth often requires investment before the return arrives. You may need to recruit people, buy equipment, move premises, develop a new product, enter a new market or provide the working capital needed to take on larger contracts.
Through regional funds backed by the British Business Bank, Mercia provides debt finance from £100,000 to £2million to eligible growing businesses across the North and the Midlands with focus on Yorkshire and the Humber and the West Midlands. Our regional investment teams take the time to understand the business, the opportunity and what the funding could enable you to achieve.
Regional business loans
Which Mercia business loan is available in my region?
We currently provide £100,000 to £2million of growth debt finance through two regional funds.
Northern Powerhouse Investment Fund II – Debt Finance
The fund provides growth funding for eligible SMEs across Yorkshire and the Humber and is managed by Mercia Business Loans.
Who is it suitable for?
- Established SMEs in Yorkshire and the Humber with growth ambitions
- Businesses demonstrating profitability and/or strong forward cash flows
- Management teams with a clear plan for the funding
- Businesses seeking £100,000 to £2million across a wide range of sectors
What can the loan support?
- Working capital and larger contracts
- Recruitment, machinery, equipment and technology
- New premises, products, services and markets
- Management buy-outs and other growth-related transactions
What information will I need?
- At least two years of historic accounts and current management accounts
- A 12-month cash flow forecast and details of existing borrowing
- Management team information, use of funds, forecasts and assumptions
Midlands Engine Investment Fund II – Debt Finance
The fund supports eligible West Midlands businesses and is managed by Frontier Development Capital, part of Mercia.
Who is it suitable for?
- SMEs seeking £100,000 to £2million
- Businesses with sustained sales growth or credible growth plans
- Companies requiring funding to accelerate growth
- Businesses with fewer than 250 employees in an eligible sector
- Businesses unable to secure all required finance from traditional sources
What can the loan support?
- Recruitment, machinery, equipment and technology
- Premises, product development and new markets
- Marketing, commercial expansion and growth working capital
- A broader funding package alongside other eligible debt facilities
We look at the business behind the numbers
Taking on debt is an important decision. The right level of borrowing should create capacity to grow without placing unnecessary pressure on cash flow.
How Mercia assesses an application
Our assessment goes beyond asking whether a business technically qualifies.
We want to understand:
- Where the business is today and what management wants to achieve
- Why funding is required and the difference it could make
- Historic performance, current trading and future cash flow
- Existing debt commitments and the assumptions behind forecasts
- How comfortably the business could service additional borrowing
We compare the financial position with and without the proposed funding. The purpose is to understand whether debt is appropriate and sustainable.
A conversation, not simply a credit score
Banks remain an important source of finance and Mercia Business Loans funding can often sit alongside an existing banking relationship. Our role is different.
- You deal with a person. An experienced investment professional reviews your application and discusses your business.
- We look forward as well as backwards. Historic accounts matter, alongside current information, forecasts, cash flow and the commercial opportunity.
- We understand growth can create working capital pressure. Recruitment, equipment and larger contracts can create a requirement precisely because the business is growing.
- We can work alongside other finance. Where permitted, Mercia Business Loans funding can form part of a wider package.
- The relationship continues. You have a named contact throughout the life of the investment.
Is a business loan right for my business?
A business loan can fund growth without selling part of your business, but borrowing should have a clear commercial purpose and affordable repayments.
Questions to consider before borrowing
- What will the money enable us to do? Connect the finance clearly to your business objectives.
- What happens if we do not borrow? Compare the cost and risk of debt with the cost of delaying the opportunity.
- Can the business comfortably service repayments? Test realistic cash-flow scenarios, not only the most optimistic forecast.
- How much do we genuinely need? The largest available loan is not necessarily the right loan.
Our investment team can discuss these questions before you make a formal application.
Frequently asked questions about Mercia business loans
Straight answers about eligibility, applications, funding uses and what happens next.
NPIF II Debt Finance and MEIF II Debt Finance currently provide eligible businesses with loans from £100,000 to £2million. Other Mercia-managed funds may be available for different or larger requirements.
Mercia Business Loans manages NPIF II Debt Finance for businesses in Yorkshire and the Humber. Frontier Development Capital, part of Mercia, manages MEIF II Debt Finance for eligible businesses in the West Midlands.
For NPIF II, we typically look for businesses that can demonstrate profitability and/or strong forward cash flows. For MEIF II, businesses should show sustained sales growth or credible and viable growth plans. In both cases, we need to understand how the business will service the proposed debt.
Potentially, yes. Regional investment funds are intended to increase access to finance for viable businesses that may not secure their full requirement from traditional sources. We carry out our own assessment, and—depending on the fund and structure—Mercia or FDC debt finance can work alongside other debt facilities.
Both funds can consider businesses across a broad range of sectors, subject to the specific eligibility requirements and exclusions of the relevant fund. If you are unsure whether your sector qualifies, speak to our team.
Investment decisions are made by experienced professionals. We consider the management team, historic performance, current trading, profitability and cash generation, future cash flow, existing borrowing, the purpose of the loan, the commercial opportunity, growth plans and the ability to service the proposed debt.
This varies by fund and application, but may include statutory and management accounts, cash-flow forecasts, financial projections, existing debt information, the proposed use of funds and supporting growth-strategy information. NPIF II applicants should expect at least two years of historic accounts, management information and a 12-month cash-flow forecast.
Yes, where eligible. Growth debt can support working capital, machinery, equipment, technology and recruitment linked to a credible growth plan. It can also potentially form part of the funding structure for an acquisition, management buy-out or similar transaction, subject to the relevant criteria.
They solve different funding needs. Debt provides capital without selling an ownership stake, but it must be repaid with interest. Equity does not normally involve scheduled loan repayments, but owners sell part of the business. The right structure depends on the company’s finances, plans, funding requirement and shareholder objectives.
A member of the investment team will review your enquiry and speak to you about the business and funding requirement. If there appears to be a potential fit, we will explain the additional information needed and the next steps in the application and investment process.
Ready to talk about funding?
You do not need to decide which funding structure is right before contacting us.
Tell us where your business is based, how much funding you are looking for, what you want to use it for, where the business is today and what you are trying to achieve.
Our team can then discuss whether Mercia Business Loans or another Mercia funding solution may be appropriate.
