British Business Investments, a commercial subsidiary of the British Business Bank, has announced a £30 million commitment to support UK small businesses through peer-to-peer lending business Funding Circle’s UK SME Direct Lending Fund.
The British Business Bank is a government-owned business development bank.
The UK SME Direct Lending Fund, which launched and began lending in July 2019, gives institutional investors, including pension funds, insurance companies and local authorities, the opportunity to lend directly to a diversified portfolio of SMEs originated by Funding Circle, the UK’s largest small business loans platform
Following Funding Circle’s accreditation to lend under the Coronavirus Business Interruption Loan Scheme (CBILS) in April 2020, the Fund was subsequently given approval to expand its investment strategy to include investing in CBILS loans. This means more investors have been able to support smaller businesses as they seek to recover from the impact of Covid-19 and look toward future growth.
This is the latest in a series of commitments from British Business Investments to Funding Circle, spanning a seven-year partnership, which has supported the growth of tens of thousands of SMEs.
Sachin Patel, Chief Capital Officer of Funding Circle said: “By investing in our fund, investors can earn attractive risk-adjusted returns whilst contributing to economic growth and job creation. This latest support from British Business Investments demonstrates the vital role FinTechs play in facilitating loans to small businesses whatever the weather. We look forward to welcoming more investors in the near future.”
Judith Hartley, CEO, British Business Investments said: “One of the objectives of British Business Investments is to support the development of diverse finance markets. We have supported the growth of FinTech and marketplace lenders since its early stages, and lenders like Funding Circle help provide competition and choice to smaller businesses. By making this commitment, more smaller businesses across the UK can get the finance they need to fulfil their growth potential.”
Since the 2008 financial crisis, lending platforms such as Funding Circle have reduced small business dependency on bank lending, bringing more choice and competition to the market than ever before. Investors lending through the platform in the UK include individuals, the British Business Bank, the European Investment Bank, the Merseyside Pension Fund, and financial institutions such as asset management and insurance companies.
Since launching in 2010, investors and lenders across Funding Circle’s geographies – including retail investors, banks, specialty finance companies asset management companies, insurance companies, government-backed entities and funds – have lent approximately £10 billion to 90,000 businesses globally.