British Business Investments (BBI), the commercial arm of the state-owned British Business Bank (BBB), has committed £30m to asset-backed lending in an effort to shore up small business funding as Brexit approaches.
The new funding will be provided through Independent Growth Finance (IGF), a firm which makes loans to small and medium-sized enterprises (SMEs) secured against assets they already own such as property, equipment and inventory goods.
Since the European Investment Fund froze commitments to UK investment funds in the wake of Brexit, the UK government and the BBB have been trying to fill this gap. BBI and IGF believe the new deal will help get “much needed working capital finance to fast-growing SMEs”.
“For innovative smaller businesses, asset-based lending can be the key to unlocking rapid growth without losing control of their business,” said BBI's chief executive Catherine Lewis La Torre.
In the 12 months up to September, IGF had provided £53m to UK businesses – a 180 per cent increase year-on-year.
“Ten years on from the financial crisis, UK SMEs are still struggling to access the finance they need to grow their businesses,” said IGF's chief executive John Onslow.
“We think that we have only begun to scratch the surface in this form of finance. It has enormous growth potential.”