Objective 1

Increase supply
of finance in the UK

When we make markets work better and help smaller businesses secure finance that they otherwise wouldn’t get, we enable investment that benefits the entire UK economy.

Objective 1

Increase supply
of finance in the UK

When we make markets work better and help smaller businesses secure finance that they otherwise wouldn’t get, we enable investment that benefits the entire UK economy.

A key objective of the Bank is to boost the supply of finance for smaller businesses in areas of the market that don’t work well. We measure this by looking at both how much we deploy directly into the market and the contribution from the private sector alongside our investment.

Within a given year, the Bank will influence this metric by committing funding through its programmes. Once the funding is committed, our partners will then typically take a number of years to draw the funding down as they invest it in smaller businesses. The combined funds drawn are added to the stock of finance. When a borrower repays a loan or an investment is realised, the funds can be returned to the Bank and other investors and will be taken out of the stock of finance measure.

In order to increase supply we have built up a wide range of delivery partners who can get that finance to the market. Over the past year we have made new commitments of £678m.

When the Bank was launched in November 2014, we were set a target of £10bn on this metric, which we were expected to achieve by 31 March 2019. We reached this important milestone midway through the 2017/18 financial year, 18 months ahead of schedule. As at the end of 2017, we had £12.3bn of stock of finance facilitated, an increase of 33% from £9.2bn the previous year. Of this, £5.2bn went towards SMEs and £7.1bn for mid-cap firms.

The increase was driven primarily by the strong performance of the Investment Programme and Business Finance Partnership. Both of these attracted higher than expected levels of private sector investment, demonstrating the powerful catalytic effect that our investment can have in unlocking private sector participation.

Debt

Start Up Loans

Since its inception in 2012, the Start Up Loans programme has delivered over 55,000 loans, providing over £400m of funding, helping to back on average 28 businesses a day, and contributing to the creation of more than 56,600 jobs.

The combination of the Bank and SULCo in April 2017 enables both organisations to collaborate as we seek to support microbusinesses and deliver the government’s manifesto commitment of 75,000 Start Up Loans by 2020.

Enterprise Finance Guarantee

The Enterprise Finance Guarantee (EFG) is our flagship debt programme. Since its launch in 2009, it has supported the provision of over 29,000 business loans to a value of over £3.1bn. It was extended for a further four years at Autumn Budget 2017.

With a wide range of delivery partners, including all the major high street lenders, it has a broad reach, making it a useful instrument for quickly targeting specific market requirements. In February 2018, we made available support for up to £100m of lending to small businesses affected by Carillion’s liquidation through our Enterprise Finance Guarantee.

ENABLE Guarantees

The ENABLE Guarantee programme has entered into £383m of transactions with three lenders during 2017/18.

The British Business Bank expanded its ENABLE Guarantee programme in November 2017 to facilitate loans specifically targeted at the housebuilding sector for the first time – rather than diverse portfolios of SME loans – providing a guarantee to United Trust Bank (UTB) to support development finance.

ENABLE Funding

This year we entered into three transactions for a total amount of £104m under our ENABLE Funding programme bringing the total funding we have committed to smaller finance providers to over £340m.

Since the first transaction in September 2015, the ENABLE Funding programme has supported lending to nearly 17,000 businesses.

Equity

Angel CoFund

Now in its sixth year of operation, it has invested nearly £40m in over 80 companies, with business angels contributing over £180m.

The portfolio of high growth businesses is diverse, covering sectors such as healthcare and life sciences, digital media and information technologies (including Fintech), creative and food.

Enterprise Capital Funds

In 2017/18, we launched three new Enterprise Capital Funds (ECFs):

  • £50m Imbiba Growth Fund for high growth UK leisure and hospitality businesses, to which the Bank contributed £30m
  • £75m Longwall Ventures 3 for science, engineering and healthcare start-up and early stage businesses, to which the Bank contributed £50m
  • £60m Episode 1 for UK Seed to Series A investments, to which the Bank contributed £36m

Venture Capital Catalyst

The Bank received £400m of resources at the Autumn Statement 2016 to expand its Venture Capital (VC) Catalyst programme with a broader mandate to target later stage VC investment. To ensure that equity investment into growth businesses continues to be available in the run up to Brexit, the Chancellor announced that we would bring forward some of the allocated resources more quickly than the original £100m a year intended.

As a result, we made £169m of new commitments to nine VC funds in 2017/18:

Growth Capital

We launched a pilot scheme to support equity funds that invest in small businesses requiring equity finance to fund ambitious investment and expansion plans.

This segment is distinct from VC because, while these businesses will be growing, they are unlikely to have the very high revenue growth rates that VC funds seek. They also tend to be more established and operate across a broad range of sectors.

Such funds often have a regional, rather than a national focus, and are more likely to invest in businesses located across the whole of the UK. In 2017/18, we made our first £15m commitment to WestBridge, which invests in the West of England and Wales.

Case study

Four and Twenty Restaurant

Founded in 2014, Four and Twenty is a family-run restaurant based in Penrith.

The founders needed external finance to refurbish and equip what was a bank, to transform it into a premier dining destination.

British Business Bank partner Enterprise Answers provided assistance, guidance and a £34,300 loan under the Bank’s flagship Enterprise Finance Guarantee programme. This new finance enabled the owners to complete the refurbishment of the premises, allowing them to realise their vision.

The restaurant has achieved great recognition, including holding the number one position on Trip Advisor for the first three years after opening and creating numerous skilled positions.

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Case study

Case study

Exonate

Exonate aims to introduce a revolutionary, game-changing eye drop for the treatment of retinal vascular disease, including wet age-related macular degeneration and diabetic macular oedema.

Currently, patients have monthly eye injections – which are not effective for everyone – to treat these conditions.

The company has expertise in the identification of compounds that are potent, selective and permeate to the back of the eye. They are currently refining their product and expect to enter clinical trials in 2020.

Exonate raised £2.8m in angel funding, supported by funding from the Universities of Nottingham and Bristol and the British Business Bank-sponsored Angel CoFund.

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Case study

At a glance

£12.3bn

Stock as at end March 2018

£678m

of new commitments
made in 2017/18

74,000+

Number of businesses supported

9

new VC Catalyst funds invested into, collectively valued at £1bn in 2017/18

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