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.