The arrival of a £30 million commitment marks the latest in a series of investments from British Business Investments (BBI) to SME loans platform Funding Circle, in an effort to better support UK SMEs.
The commitment will be provided through Funding Circle’s UK SME Direct Lending Fund, which began lending in July 2019 and aims to provide institutional investors - such as pension funds, insurance companies and local authorities - the opportunity to lend directly to a portfolio of SMEs originated by Funding Circle.
BBI is a commercial subsidiary of the British Business Bank and has been in partnership with Funding Circle for the past seven years, supporting the growth of tens of thousands of SMEs.
Judith Hartley (pictured above), chief executive officer at BBI, said: “One of the objectives of BBI is to support the development of diverse finance markets. We have supported the growth of fintech and marketplace lenders since its early stages, and lenders like Funding Circle help provide competition and choice to smaller businesses. By making this commitment, more smaller businesses across the UK can get the finance they need to fulfil their growth potential.”
According to BBI, it aims to earn a commercial return by investing – through finance providers – in SMEs, pursuing investments on a fully commercial basis without receiving any economic advantage from the government.
Sachin Patel, chief capital officer of Funding Circle, explained: “By investing in our fund, investors can earn attractive risk-adjusted returns whilst contributing to economic growth and job creation. This latest support from BBI demonstrates the vital role fintechs play in facilitating loans to small businesses whatever the weather. We look forward to welcoming more investors in the near future.”
The fund expanded its investment strategy to include investing in CBILS loans following the lender’s accreditation to lend under CBILS in April 2020. This has resulted in more support for SMEs as they seek to recover from the impact of the pandemic.
Since its establishment in 2010, investors and lenders across Funding Circle’s total geographies have lent some £10 billion to 90,000 businesses across the globe.
Investors lending through the Funding Circle’s platform in the UK include the British Business Bank, the European Investment Bank, the Merseyside Pension Fund, as well as financial institutions such as asset management and insurance companies, and individuals.
New £15 million commitment to Compass Business Finance
Alongside this news, the BBI’s Investment Programme has also announced another £15 million commitment of block discounting funding to Compass Business Finance to increase the flow of asset finance products into UK SMEs in the print, packaging and manufacturing sectors.
According to BBI, it will provide the specialist lender with the funding over the next three to five years, enabling it to pursue its growth trajectory.
Hartley continued: “BBI supports independent operators in the asset finance sector by providing additional funding and widening the choice of finance options that smaller businesses across the UK can access on the market. We look forward to working with Compass Business Finance over the next five years to help those businesses get the finance they need.”
Similarly to Funding Circle, Compass Business Finance has been partnering with the British Business Bank for several years and has participated in several initiatives designed to support UK businesses
Mark Nelson, director of Compass Business Finance, added: “The commitment from BBI, will enable us to meet the growing demand for funding in our markets, including the provision of CBILS and other asset-based finance. Having the ability to support our customers and maintain our high service levels is paramount, and this partnership gives us the confidence to know that we can continue provide that.”
Founded in 2005, Compass Business Finance is an independent finance company that primarily provides asset-based finance for the print, packaging and engineering sectors.