British Business Bank Investments has announced the first facility under its new expansion capital initiative, which supports finance providers who lend to smaller businesses.
The first transaction is a GBP16.5 million revolving credit facility for Kingsway, a Cheshire-based asset finance specialist. It is expected to increase Kingsway’s leasing capacity by up to GBP25 million, supporting investment in plant and machinery across the UK.
The expansion capital initiative, developed by British Business Bank Investments as part of its investment programme, enables it to support the development of diverse debt finance markets more effectively.
Under the new initiative, British Business Bank Investments can make investments as sole investor, without the need for its investments to be match-funded. The initiative unlocks increased development capital to speciality lenders serving smaller businesses, provided the lenders can demonstrate the funding will leverage additional lending or otherwise be assessed as having a strong fit with the investment programme’s overall aims.
Since the investment programme began in early 2013, it has committed more than GBP120m to six asset finance providers.
Keith Morgan, chairman of British Business Bank Investments, says: “We see asset finance as an increasingly important option for smaller businesses looking to grow and invest, as evidenced by our recent Small Business Finance Markets Report, which shows strong growth in asset finance volumes over the last two years. We are keen to introduce more innovative ways to meet the growing demand for this type of finance, in particular leasing and hire purchase for plant and machinery investments.
“We are delighted to support Kingsway with this revolving credit facility through the new expansion capital initiative under our investment programme.
“The greater freedom and flexibility we gain from acting as a sole investor will enable us to make an even bigger impact on finance markets serving smaller businesses across the UK.”
Adrian Anthon, managing director of Kingsway, says: “I am delighted that Kingsway is the first UK asset finance company to benefit from the British Business Bank Investments Ltd new expansion capital initiative.
“From our North West base, Kingsway has been supporting UK small businesses for almost 20 years and this new facility will enable Kingsway to significantly increase our lending to small businesses across the UK.”
Simon Goldie, head of asset finance, Finance & Leasing Association, adds: “The expansion capital initiative is an important addition to the British Business Bank’s funding initiatives, and will increase Kingsway’s ability to support smaller businesses through asset finance. We look forward to seeing more FLA member firms working with the bank to drive economic growth in the UK.”
Asset finance continues to grow in popularity, with the Finance & Leasing Association reporting a growth in asset finance new business – primarily leasing and hire purchase – of 11 per cent in 2015 to GBP28.1bn (excluding high-value deals), the market’s second consecutive year of double-digit growth. The asset finance industry funded almost 32 per cent of total UK investment in machinery, equipment and purchased software in 2015.
