With Brexit looming, the government has agreed to lend more money to British SMEs via peer-to-peer lending platform Funding Circle.
The new £150m commitment from the British Business Bank (BBB) comes as part its ENABLE Funding programme and aims to support the growth of more than 2,000 UK firms.
What this means is that the BBB facility will come into use as the FCIF’s existing facilities – from the European Investment Bank and Citibank – are paid down. A research note from Numis sees the BBB facility as positive in that it will allow the FCIF to maintain its leverage around the 50 per cent limit, ‘which should enhance returns’.
Funding Circle’s planned multi-billion pound funding programme with the European Investment Bank was put on ice after the Brexit referendum of 2016. It did not then take long for James Meekings (pictured right), co-founder of the platform, to call on the UK government to step up in Europe’s place.
Since March 2013, the government (via the British Business Bank) has lent a grand total of £165m to small businesses through Funding Circle. The platform says this investment has yielded roughly £10m in cumulative net interest for the taxpayer.
The British Business Bank’s CEO Keith Morgan said that encouraging the development of new types and providers of finance is ‘a key objective’ of the bank.
Small Business Minister Kelly Tolhurst said in a statement: “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.”