British Business Bank’s Strategy for Supporting SMEs

POSTED: 21st October 2014
IN: Business news

Small and medium-sized businesses play a key role in the UK economy, employing almost 60% of the private sector workforce and accounting for almost half of all turnover.

Their continuing success is vital to building the UK economy. Being able to access the right type of finance at the right time allows these businesses to invest, grow and create jobs. To support this aim the government has established the British Business Bank to support economic growth by making finance markets work better for small businesses in the UK. It uses funding and guarantees backed by the government to bring more private sector resources into small business lending and investment.

The British Business Bank provides finance and applies guarantees through commercial lenders and investors, who use these financial resources – together with their own money – to lend to or invest in smaller UK firms. It operates right across finance markets, from supporting early-stage equity funding, through the provision of growth capital, to senior debt for established SMEs, and will share in any returns on investments made. It then recycles these back into further lending and investment.

The solutions it provides to improve finance markets fit into four broad categories.

  • Venture Capital Solutions – providing funding to the venture capital industry so it invests more in UK businesses (current programmes – Business Angel CoFund, Enterprise Capital Funds).
  • Lending Solutions – providing funding and guarantees to lenders to encourage more SME lending – in particular to businesses with short track records and low levels of collateral (current programmes – Start-Up Loans, Enterprise Finance Guarantee).
  • Investment Programmes – supporting and accelerating new lending models in the UK – eg, debt funds, P2P lenders and supply chain finance providers.
  • Wholesale Solutions – a pilot programme to guarantee bank lending to small firms (first transactions expected autumn 2014).

Small firms don’t obtain finance directly from the British Business Bank – it makes its impact from generating more activity by the private sector. The Bank is seeking to increase both the level and diversity of funding options available to small businesses in the UK.

With £3.9bn of government funding committed, it aims to leverage in private sector capital to create £10bn of funds for UK businesses over the next 5 years. This should provide significant support to the lending landscape for small business, delivered through a range of providers.  More information can be found at

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