British Business Bank Investments is the commercial arm of the British Business Bank. It makes investments into providers of finance to smaller business in the UK in order to addresses long-standing gaps in the finance market for these businesses and promotes greater choice in their supply of lending.
This programme offers loans or investments of between £5 million and £200 million in finance providers to smaller businesses.
The Investment Programme addresses long-standing gaps in the finance market for smaller business and promotes greater choice in their supply of lending. It makes commercial investments that stimulate at least the same amount of investment from the private sector, encouraging new lenders in to the market and the growth of smaller lenders.
The Investment Programme will invest in those new and established lending channels best able to meet four key objectives:
- Increase the number of debt finance markets available to smaller businesses.
- Mobilise new funding from private sector sources to support lending to smaller businesses.
- Channel finance to smaller businesses in an effective, appropriate and responsible manner.
- Expand the total amount and / or types of debt funding available to smaller businesses.
Although there are no specific exclusions cited within the programme guidelines, those wishing to apply are advised to liaise with the funding provider in the first instance to discuss eligibility.
The Investment Programme is about providing investment and funding to lenders such as debt funds, peer-to-peer lenders and financial institutions who provide debt finance to smaller businesses.
The Bank welcomes proposals from lenders who meet the following investment criteria:
- Those whose focus is to provide lending to viable businesses operating in the UK with turnover of up to £100 million.
- Have a strategy based on the provision of debt finance, or debt-like finance where the majority of returns are debt-based.
- Seek an amount of investment from government of between £10 million and £100 million.
- Lend funds to SMEs within 3 years of BBBIL’s commitment, with preference for lending activity to commence by the end of 2014.
- Generate commercial returns, with government investing on terms and with a return and level of risk that would also be attractive to private sector investors.
- Seek no more than 50% of their total investment requirement from BBBIL.
- Make sure that BBBIL will invest on equal terms with private sector investors (eg generate the same net return and share the same level of risk as private sector investors).
- Show they have a competent team, with enough expertise to carry out the proposal’s investment strategy.
- Show transparent and appropriate investment, regulatory and tax structures.
Match funding is not a stipulated requirement of this programme.
Investments will be made across a wide range of lending channels and lending products. This will ensure that government promotes diversity of supply of lending to smaller businesses. These types of investment could include:
- equity, equity-like and debt instruments in financial institutions;
- debt funds or asset backed lenders that lend directly to businesses; and
- non-bank channels, such as supply chain finance, peer-to-peer lending and other lending platforms.
Proposals will fall into two categories: Managed Investments or Direct Capital Investments:
- Managed Investments: investment, alongside the private sector, into managed lending funds, or other managed lending vehicles that on-lend funds directly to SME borrowers.
- Direct Capital Investment: investments, alongside the private sector, either by way of equity or debt injection into lending businesses able to use these commitments to increase their lending activity.
The application process is currently open. The programme will remain open for new applications until the funds allocated to the programme, currently up to £400 million, are committed.
Potential applicants who have any queries about the Investment Programme in general, or questions in advance of submitting a proposal, should contact the Investment Programme team.
Further advice and assistance with submitting an application may be sought directly from the British Business Bank.