British Business Bank increases Allica capital facility to £45m

The British Business Bank has expanded its support for Allica Bank with a £15 million increase to its Tier 2 capital facility, taking the total funding provided to the challenger bank to £45 million.

The new facility builds on a £30 million Tier 2 capital agreement struck between the two organisations in 2022 and is expected to support up to £150 million of additional lending to UK smaller businesses.

Allica Bank, which focuses exclusively on established SMEs with between five and 250 employees, has grown rapidly since receiving its banking licence in 2019. The bank has provided more than £4 billion of lending to over 25,000 businesses and now holds more than £5 billion in deposits.

The latest transaction forms part of the British Business Bank’s programme of Tier 2 capital investments, which are designed to support the growth of lending institutions and increase the availability of finance to smaller businesses across the UK.

Richard Bowen, Managing Director, Direct Financial Institution Solutions at the British Business Bank, said: “Allica has grown substantially since our last Tier 2 capital transaction in 2022.

“Having a delivery partner like Allica in the UK lending ecosystem supports our mission of delivering economic growth for the UK, and we are excited that this transaction will support Allica in continuing to support its customers’ growth journeys in the future,” he said.

“It’s encouraging to see the breadth of smaller businesses Allica has supported since then, as well as the work it has done representing the smaller business community, while establishing a strong brand profile.”

The additional funding follows a landmark year for Allica. Earlier this year, the bank was valued at close to $1.2 billion as part of a Series D fundraising round, cementing its position as one of the UK’s fastest-growing fintech lenders.

Richard Davies, CEO of Allica Bank, said: “The extension of our partnership with the British Business Bank is another important step in backing the UK’s established SMEs – the businesses that power the real economy but are too often overlooked.

“This additional capital allows us to go further and faster in supporting these businesses with the funding they need to grow, invest and create jobs. It’s a strong example of how the right partnerships can help unlock more finance for established businesses and, in turn, drive broader economic growth across the UK.”

According to research conducted by Oxford Economics, every £1 million lent by Allica to established businesses contributes an estimated £2.4 million to UK GDP, supports 35 jobs and generates £600,000 in tax revenues.