British Business Investments (BBI) is the the commercial division of the state owned and government backed British Business Bank (BBB). And this week it has announced it will be making £30m Of asset-backed lending available in an effort to support UK small businesses in the run up to Brexit
Specifically, the new money will be coming from Independent Growth Finance (IGF) which makes loans to UK SMEs backed by assets such as property, inventory and equipment.
One of the reasons why this is important is that, in the wake of the Brexit vote in June 2016, the European Investment Fund stopped lending to UK concerns. This is a measure from the UK government and British Business Bank to fill some of that funding gap.
BBI chief Catherine Lewis La Torre says: “For innovative smaller businesses, asset-based lending can be the key to unlocking rapid growth without losing control of their business.”
As we’ve written many times before over the past decade, even healthy and successful businesses sometimes need help in the way of lending, not just for growth, but also, cash flow. Traditional banks have not been the great champions of SMEs they claim to be and the purse strings there remain tight.
That’s a sentiment echoed by IGF CEO John Onslow: “Ten years on from the financial crisis, UK SMEs are still struggling to access the finance they need to grow their businesses. We think that we have only begun to scratch the surface in this form of finance. It has enormous growth potential.”
Asset secured lending will appeal to many SMEs and is, needless to say, attractive to lenders too. But whilst any new source of funds is certainly welcome, in the grander scheme of things £30m is a fairly small total when you consider the wider problems of SME lending.