British Business Bank supports £120m funding for Rural Asset Finance

The British Business Bank (BBB) has agreed an ENABLE Guarantee with specialist agricultural lender Rural Asset Finance. The transaction is anticipated to support a portfolio of up to £120 million to smaller rural businesses across the agricultural sector in the UK through a combination of asset finance and term lending.

The funding is aligned with Rural Asset Finance’s focus on sustainability and includes a margin adjustment if sustainability performance targets are met. It is being provided by NatWest Bank and BCI Capital, with the British Business Bank guaranteeing a portion of the funding provided by NatWest.

Rural Asset Finance was established in 2019 and is a specialist direct lender to British farmers helping to fund, diversify and future-proof rurally based businesses. Financing options can be flexible combining equipment finance and business loan options to tailor each solution for the borrower.

Matthew Smart, Managing Director, Rural Asset Finance said: “With the support of the British Business Bank’s ENABLE Guarantees programme, alongside lenders NatWest Bank and BCI Capital, this enhanced facility carries an attractive credit margin, which gives Rural Asset Finance a highly competitive offering to our borrowers.

“As a result, we are now best placed to support farmers driving efficient high-tech food production, as well as those diversifying into alternative revenue streams. Food production and diversification on UK farms are key to ensuring a healthy, robust future for the industry and the wider rural economy in the current challenging geo-political landscape.”

The BBB’s ENABLE Guarantees programme is designed to encourage banks and other lenders to increase their lending to smaller businesses by reducing the amount of capital or junior funding required for such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the risk in a transaction supporting debt finance to smaller businesses, in return for a fee.

Michael Strevens, Managing Director, Structured FI Solutions, British Business Bank said: “This transaction with Rural Asset Finance builds on the work we have done through the ENABLE Guarantees programme to support the provision of funding to businesses in the agricultural sector.

Collaborating with established capital providers like NatWest and BCI Capital allows us to increase the availability of funding for non-bank lenders such as Rural Asset Finance and, through them, the smaller businesses they lend to.

“In addition, by including a pricing incentive linked to sustainability objectives we hope to see further expansion of small business lending in sustainable areas, including farm renewable energy installations.”