The British Business Bank (BBB) has announced a $40 million commitment to provide U.K. small- and medium-sized businesses (SMBs) working capital loans in an effort to prepare them for Brexit.
According to news from City A.M. on Monday (Dec. 4), the BBB’s commercial unit, British Business Investments (BBI), committed the funds for asset-backed business lending, with an eye on ensuring SMBs are able to shore up financing in anticipation of Brexit. The BBI said it would provide the funds to borrows via Independent Growth Finance.
Brexit has already impacted U.K. small businesses’ ability to access financing after the European Investment Fund (EIF) halted commitments to U.K. investment funds following the Brexit vote, the publication explained. Reports in August in Business Matters said the EIF and the European Investment Bank contributed to a $900 million decline in small business lending in July alone.
At the time, Federation of Small Businesses National Chairman Mike Cherry said the decline signaled “lower investment intentions and confidence levels.”
The BBB has been working to fill that small business finance gap and said that the new commitment will provide “much-needed working capital finance to fast-growing SMEs.”
“For innovative smaller businesses, asset-based lending can be the key to unlocking rapid growth without losing control of their business,” the BBI’s Chief Executive Catherine Lewis La Torre said in a statement.
In another statement, IGF Chief Executive John Onslow spoke of the ongoing challenge small businesses face when seeking financing.
“Ten years on from the financial crisis, U.K. SMEs ares still struggling to access the finance they need to grow their businesses,” he said. “We think that we have only begun to scratch the surface in this form of finance. It has enormous growth potential.”
While the British Business Bank is focusing on working capital finance, the U.K. government has also turned to the nation’s top financial institutions to expand trade finance to SMBs and their suppliers in a similar move to help prepare those businesses for Brexit.