The British Business Bank has announced that the first £125m of new lending is available to small businesses in the UK through its ENABLE Guarantees programme. This programme is designed to address specific market failures where insufficient funding is available, by guaranteeing a proportion of the loan pool that banks will offer to SMEs. By providing this support, the banks' capital requirements for this lending are reduced, so they can lend more to small businesses.
The first round of funding is being made available by Clydesdale and Yorkshire Banks, with at least £50m going to products and industry segments the banks have not previously covered, including cash flow lending specifically for SMEs, automotive tooling finance, creating an Emerging Technology Lending Unit and introducing a new Renewables Finance product.
The British Business Bank is a development bank wholly owned by HM Government. It is not a traditional banking institution as such, but instead works indirectly to increase the supply of finance available to small businesses, through initiatives like ENABLE and the proposed "Help to Grow" Growth Loans scheme.
Vince Cable, Secretary of State for Business, Innovation and Skills said:
“This new guarantee programme will make it easier for challenger banks to lend to small businesses and help to accelerate the transformation of UK banking into a more dynamic and competitive marketplace.”