British Business Bank receives £5bn capacity boost to back SMEs

The British Business Bank’s total financial capacity will increase by £5 billion to £30.6 billion following a Budget package aimed at expanding access to finance for smaller businesses, innovative scale-ups and strategically important sectors.

The measures include additional capacity for investment in equity funds, a new venture debt product and expanded support for community lenders. The package also backs a new generation of regional investment funds, further investment in women-led businesses and increased support for defence, security and dual-use technologies.

The Bank said the package is expected to support more than 24,600 existing jobs and create more than 15,800 new jobs over the lifetime of the finance.

“Today’s measures announced by the Chancellor are a significant boost to the Bank’s firepower, enabling us to unlock more finance for smaller businesses, innovative scale-ups and strategically important sectors across the UK. This increased capacity will help more ambitious businesses start, scale and stay in the UK, driving economic growth and creating jobs across the country.”

Within the wider uplift, a £2 billion expansion will support innovative and growing businesses, including £1.4 billion of additional capacity for investment in equity funds.

This will give the Bank greater flexibility to back specialist funds investing in high-growth UK companies across the eight Industrial Strategy sectors, including defence and dual-use technologies. It will also enable the Bank to cornerstone growth-stage funds capable of making larger investments in fast-growing scale-ups.

The Bank said the additional capacity would respond to strong market demand, help UK venture capital funds reach scale and attract greater institutional investment.

A further £450 million will establish a new venture debt product, addressing a gap in the financing available to innovative scale-ups seeking growth capital without giving up equity.

The Bank will work with commercial lenders to unlock facilities for high-growth companies in Industrial Strategy sectors, including defence and dual-use technologies. It said venture debt in the UK had historically been focused on smaller ticket sizes.

The Community ENABLE Funding programme will receive a £165 million expansion to support additional lending through Community Development Finance Institutions (CDFIs).

The programme’s first stage has allocated £123 million to eight CDFIs. The additional capacity is intended to increase lending to underserved businesses and communities across the UK’s nations and regions.

The Bank will also develop a new generation of Nations and Regions Investment Funds in partnership with Mayoral Strategic Authorities and devolved governments.

The successor funds will build on the Bank’s existing investment funds, which cover every UK nation and region outside London.

The Bank will invest a further £100 million next financial year to support women-led businesses and funds.

It said it had already committed more than £130 million this year, including a £30 million anchor investment in the Invest in Women Taskforce’s “Women Backing Women” Fund of Funds.

The additional commitment is intended to increase the flow of capital to female founders and build on the Bank’s existing investment activity.

The package expands the Bank’s support for defence, security and dual-use technology companies, with the aim of helping businesses access finance to scale and remain in the UK.

“Britain is bursting with talent, ideas and ambition that can lead the industries of the future, and this package will help deliver our Industrial Strategy by turning more home-grown potential into jobs and investment.

“By giving the British Business Bank a stronger hand to back ambitious scale-ups, work more closely with devolved governments and mayors, and boost support for defence technologies, we’re helping companies across the UK to take the next step – driving growth and strengthening our security in a more uncertain world.”