The British Business Bank has extended its outreach to SMEs by announcing the first facility under its new expansion capital initiative. The scheme will see British Business Bank Investments Ltd, the commercial arm of the British Business Bank extend capital to commercial finance providers as a way of channeling much needed funds to small ad mid-size companies.
The first facility is going to Kingsway, a Cheshire-based asset finance specialist, which will receive a facility of £16.5m, taking its potential lending capacity to around £25m.
‘An increasingly important option’
The move, according to the BBB, reflects the growing importance of asset and commercial fiannce to solving the funding gap at SMEs. Keith Morgan, Chairman of British Business Bank Investments Ltd, said, “We see asset finance as an increasingly important option for smaller businesses looking to grow and invest, as evidenced by our recent Small Business Finance Markets Report, which shows strong growth in asset finance volumes over the last two years. We are keen to introduce more innovative ways to meet the growing demand for this type of finance, in particular leasing and hire purchase for plant and machinery investments.”
“We are delighted to support Kingsway with this revolving credit facility through the new expansion capital initiative under our Investment Programme. The greater freedom and flexibility we gain from acting as a sole investor will enable us to make an even bigger impact on finance markets serving smaller businesses across the UK.”
The move was welcomed by the Finance & Leasing Association, the body which brings together commercial finance providers. Its head of Asset Finance, Simon Goldie, said, “The expansion capital initiative is an important addition to the British Business Bank’s funding initiatives, and will increase Kingsway’s ability to support smaller businesses through asset finance. We look forward to seeing more FLA member firms working with the Bank to drive economic growth in the UK.”
The decision comes after the BBB CEO Keith Morgan, told MPs last week that he wanted more work to be done to bridge the gap between traditional and alternative finance