The British Business Bank has outlined plans to deliver what it describes as a step change in the way smaller businesses are financed, following an updated mandate from the government and a significant expansion of its financial capacity.
The state-owned development bank, whose mission is to support economic growth by helping smaller firms access the capital they need to start, scale and remain in the UK, received an increased permanent capacity of £25.6bn earlier this year.
Its new strategy sets out how it intends to deploy that firepower through its investment and banking divisions, alongside its business development arm.
CATALYSING PRIVATE CAPITAL
The Bank said it plans to increase its annual deployment by two-thirds, aiming to unlock around £26bn of private capital alongside £13bn of its own funding. A further ambition is to enable up to £10bn in smaller business lending through guarantees.
The increased scope is positioned as a way of deepening the flow of capital into firms that have traditionally struggled to secure appropriate finance.
HIGHER RISK AND A FOCUS ON SCALE-UPS
The strategy confirms that the Bank intends to take on greater risk, including providing first-loss capital for deals supporting emerging technologies in which the UK has potential to compete globally. It will also direct more activity towards sectors aligned with the modern Industrial Strategy.
More than 60% of its venture and venture-growth investment will be targeted at scale-ups, with the facility to back the strongest growth-stage funds with investments of £100m or more.
The Bank also intends to increase the number and size of its direct investments to help strategically important scale-ups remain anchored in the UK.
REGIONAL INVESTMENT AND START-UP SUPPORT
The plan includes significant regional measures. The Bank will deliver eighty-five thousand new Start Up Loans and commit £150m to Community Development Finance Institutions to help underserved groups.
It also plans to expand regional investment, support science and innovation clusters, help establish new angel networks, and launch two new regional funds in the East and South-East of England.
INTERNAL REFORM
The Bank will also overhaul its governance and operating model, aiming for greater flexibility and faster decision-making. This includes streamlining internal processes to speed up investment approval.
Louis Taylor, chief executive of the British Business Bank, said: “By 2030, our ambition is clear: a more dynamic and inclusive finance ecosystem, where innovative and ambitious companies – wherever they are based and whoever leads them – can access the capital they need not only to get started, but to scale, stay, and succeed here in the UK.
“Our planned activity over the next five years is expected to fund around 180,000 businesses, support the creation of around 370,000 new jobs, crowd in £26bn of additional private capital and help deliver £68bn of benefit to the economy”.
Peter Kyle, secretary of state for business and trade, said: “Our small businesses have ambition and bright ideas in abundance, but too often they lack the finance they need to reach their full potential here in the UK, and as a result, our economy suffers.
“This has to change and with this new five-year plan it will. The Bank is increasing its pace of investment by two thirds, with a whopping £4bn boost for the most promising businesses in our Industrial Strategy sectors, supporting tens of thousands of businesses, creating jobs, and driving growth.”
The commitments align with four strategic objectives set out in October: supporting promising businesses in priority sectors, improving access to finance, unlocking potential across regions and communities, and mobilising institutional capital at scale.
