BBB commitment with Funding Circle SME Income Fund
British Business Bank announces new commitment with Funding Circle SME Income Fund Limited to increase UK small business lending
The British Business Bank today announces a commitment of up to £150m for lending to UK small businesses through Funding Circle, a global small business loans platform. The transaction, under the Bank's ENABLE Funding programme, is designed to accelerate lending to small businesses and is expected to support the growth of more than 2,000 UK firms.1
The new facility will provide senior financing to a transaction with the Funding Circle SME Income Fund Limited (FCIF), a publicly traded fund that lends exclusively through Funding Circle.
This new commitment extends the existing partnership between Funding Circle and the UK Government. Since March 2013 £165m has been lent directly to the small business ecosystem through Funding Circle using the British Business Bank's programmes, earning around £10m in cumulative net interest for the taxpayer. In 2017 alone, such lending is estimated to have created and sustained around 2,100 jobs2 across the UK.
Keith Morgan, CEO, British Business Bank, said: "Encouraging the development of new types and providers of finance is a key objective for the British Business Bank. We have supported the growth of peer-to-peer lending as a model since its earliest stages. It helps provide welcome choice and competition and we are pleased that this part of the market continues to expand significantly, with volumes increasing by a further 51% in 2017. By making this new commitment, more smaller businesses across the UK can get the finance they need to fulfil their growth potential."
Small Business Minister Kelly Tolhurst said: "The UK's 5.7 million small businesses are the backbone of our economy, and ensuring we cement our status as one of the best places in the world to run a business is fundamental to our modern Industrial Strategy.
"A key part of this is ensuring that growing businesses can access the right finance for their needs, from a range of sources and this British Business Bank commitment through Funding Circle will give small businesses across the country the option of peer-to-peer lending to help them realise their full potential."
Sachin Patel, Chief Capital Officer at Funding Circle said: "This significant commitment further strengthens our successful partnership with the British Business Bank and is a reflection of the work we're doing to provide investors with attractive, risk-adjusted returns. The UK Government, through the Bank, has been a pioneer of innovation within the FinTech industry and we look forward to continuing to work together to support the growth ambitions of even more small businesses across the country."
Funding Circle was the first platform to open up small business loans as an asset class to a diverse range of investors. To date 85,000 individuals, the European Investment Bank, the European Investment Fund, German development bank KfW and many other financial institutions have lent £5.6 billion through Funding Circle to 56,000 businesses across the UK, US, Germany and the Netherlands.
Around four in ten smaller businesses go to their main bank first when they have a need for external finance3, and the large banks continue to hold a dominant position in small business lending, accounting for around 80% of the market. The platform lending model has the potential to create healthy competition and choice for smaller businesses.
ENDS
For more information
press@fundingcircle.com / +44 (0) 203 667 2245
suzanna.jebbitt@british-business-bank.co.uk , scott.shearer@british-business-bank.co.uk / 020 3772 1351
Notes to editors
About Funding Circle
Funding Circle (www.fundingcircle.com) is a global small business loans platform, matching small businesses who want to borrow with investors who want to lend in the UK, US, Germany and the Netherlands. Since launching in 2010, investors across Funding Circle's geographies - including more than 85,000 retail investors, banks, asset management companies, insurance companies, government-backed entities and funds - have lent over £5.6 billion to more than 56,000 businesses globally.
About the British Business Bank
The British Business Bank is the UK government's economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.
The British Business Bank is currently supporting more than £5.5bn of finance to over 78,000 smaller businesses (as at end of June 2018).
As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses:
● The Business Finance Guide (published in partnership with the ICAEW and a further 21 business and finance organisations) impartially sets out the range of finance options available to businesses at all stages - from start-ups to SMEs and growing mid-sized companies. Businesses can take the interactive journey at www.thebusinessfinanceguide.co.uk/bbb.
● The new British Business Bank Finance Hub provides everything high-growth businesses need to know about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. The new site also features case studies and learnings from real businesses to guide businesses through the process of applying for growth finance.
As the holding company of the group operating under the trading name of British Business Bank, British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates under its own brand name through a number of subsidiaries, one of which is authorised and regulated by the FCA.
British Business Bank plc and its principal operating subsidiaries are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the British Business Bank plc website.
The commitment from British Business Bank plc to Funding Circle SME Income Fund does not amount to any endorsement or warranty from British Business Bank plc, or the government of the UK.
1 Estimate based on average loan size of £70,000.
2 Estimates provided by Oxford Economics following the launch of a report called 'Economic impact of lending through Funding Circle'
3 British Business Bank/Ipsos MORI 2017 Business Finance Survey
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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