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Business bank pledges £40m to support SME lending

posted 26 Feb 2014, 04:10 by Richard White   [ updated 26 May 2015, 04:49 ]

The British Business Bank's investment programme has pledged a further £40m for small businesses through peer-to-peer lender Funding Circle. The bank has £1.25bn at its disposal.

The Funding Circle investment will go live on 1 March 2014 and is expected to support an estimated £450m of lending over the next 18 months.

As part of the deal, £35m of the investment of the British Business Bank capital will be used to fund 10 per cent of the value of each business loan, with 90 per cent from private sector investors.

The investment follows a £20m capital injection into the Funding Circle by the Business Finance Partnership (BFP) in December 2012, which led to the current Business Bank investment programme.

Peter Wilson, managing director of the British Business Bank's investment programme, said: "The pace is really starting to build in terms of the momentum of our commitments and the impact that our investment programmes are making.

"The pipeline of future commitments is strong and we are seeing continuing interest through new applications to the programme."

Business secretary Vince Cable added: "The Business Bank is helping to support serious volumes of lending to small and medium-sized businesses through new finance providers.

"Too much business lending is concentrated in the big banks and, if we're to have a properly functioning business lending market, they need to be challenged by new banks, peer-to-peer lenders and other alternative providers."

The British Business Bank Investment Programme was launched in April 2013. Its latest £300m funding round is open for new applications until 31 May 2014.