Beechbrook Capital will provide £100m from the first close of its UK SME Credit Fund, the lender has announced.
The fund was set up last year to support small and medium-sized firms with a turnover of between £10m and £100m that have no private equity backing.
This could provide backing for around 40,000 UK businesses, with loans available from £3m to £15m to enable firms to expand or help with buy-outs and acquisitions.
The Credit Fund has committed investors in the shape of British Business Bank Investments Ltd, the European Investment Fund, and the commercial arm of the British Business Bank. Additional investments are expected to boost the fund to up to £200m by the second quarter.
Managing partner of Beechbrook, Paul Shea, said: “The UK SME Credit Fund is a natural evolution for Beechbrook. We are pioneering this type of funding to UK SMEs.
“We have received numerous requests for it from family and manager-owned businesses around the country, which are acutely aware of the shortage of long-term development and expansion finance currently available. Other credit funds in the market generally target larger companies or focus specifically on private equity-backed buy-outs.
“We look forward to playing a constructive role in helping fund the growth of UK small and medium-sized businesses.”
Bridging a gap
Peter Wilson, CEO of British Business Bank Investments, added: “We are particularly pleased to have invested in its latest UK SME Credit Fund.
“The Fund’s focus on non-private equity-backed SMEs will help address the well-publicised funding gap for loans between £3m and £15m and is in line with our aim to support diverse debt finance markets.”