OakNorth strikes £133m deal with British Business Bank

The business lender joins the Enable guarantee programme to boost loans to small firms.

Europe’s most valuable fintech OakNorth has deepened its relationship with the government’s British Business Bank after signing a £133m deal to take part in its Enable guarantee programme for small businesses.

The scheme encourages banks to increase loans to smaller businesses by reducing the amount of capital required to be held against this type of lending. In this arrangement, the government takes on a portion of the bank’s risk on a portfolio of these loans for a fee.

Digital business lender OakNorth said it has lent over £3bn to businesses across the UK without a single default to date, creating 13,000 new jobs and helping to build 10,000 homes since it was founded in four years ago.

Co-founder and chief executive Rishi Khosla (pictured), said: “Since our launch in September 2015 we have been committed to helping businesses achieve their growth ambitions. The Enable guarantee will enable us to lend even more to small and medium-sized enterprises across the UK and help create new homes and jobs in the process.”

Earlier this month, OakNorth tripled pre-tax profits to £33.9m last year, while reporting its total loan facilities jumped 160 per cent to £2.2bn.

The platform is valued at around $2.8bn, following $440m investment led by Japanese conglomerate SoftBank in February.

British Business Bank chief commercial officer Patrick Magee said: “A key aim for the British Business Bank is to help diversify finance markets for smaller businesses, providing greater choice and competition. I’m therefore very pleased to continue our strong relationship with OakNorth, which is still a relative newcomer to the UK marketplace.”

OakNorth previously signed an agreement with the British Business Bank to secure £30m of funding to help with its small business lending two years ago.

The British Business Bank has been lending to SMEs since 2014, and is currently supporting some 82,000 smaller businesses with more than £5.9bn worth of finance.

UPDATE 2019-03-28 - An earlier version of this article incorrectly said the British Business Bank had lent to 82,000 smaller businesses in total since it was founded in 2014.