British Business Bank Investments Ltd, the commercial arm of the government-owned British Business Bank, has agreed to provide a facility of up to £5m to Liberis to support finance for small businesses.

Liberis estimates that the investment will support funding to over 2,000 small businesses in 2016 alone. The British Business Bank was set up with the aim of supporting economic growth in the UK by making finance markets for smaller businesses work more effectively.

The facility will enable Liberis, the UK’s first provider of merchant cash advances, to expand. Through its Business Cash Advance product, Liberis provides funding from £4,000 to £300,000 to small businesses based on their future credit and debit card sales. The funding is paid back via a pre-agreed percentage of the business’s credit or debit card transactions.

Liberis has now financed over £100m, and the company expects to double its annual volumes in 2016 to provide nearly £50 million of funding to small businesses. In total, Liberis has now helped over 3,000 businesses invest in and grow their businesses.

The average business is advanced £15,000 from Liberis, typically to fund refurbishment, stock purchase or expansion, which is usually paid back over seven to eight months.

Tom Bason, finance director at Liberis said: “Small businesses are vital to job creation and economic growth yet many still struggle to get loans through traditional providers. Liberis offers a flexible ‘pay as you earn’ option that has proven particularly popular with companies where income fluctuates on a seasonal basis. We want to become the first choice for small business finance by offering a simple and responsible option.”

Peter Wilson, CEO of British Business Bank Investments Ltd, said: “We are particularly keen to support innovative approaches to providing finance which expand the reach and choice of funding for smaller UK businesses.

“Merchant cash advances can offer a transparent and aligned financing option for business including some which might otherwise be unwilling or unable to raise finance. We welcome Liberis’ responsible approach to developing the sector, reflected in their customer charter, and believe that their growth plans will help our funding reach companies which might otherwise struggle to raise finance.”