The British Business Bank launches first phase of its ‘Help to Grow’ scheme

The British Business Bank has officially launched the first phase of its ‘Help to Grow’ programme, aimed at helping small businesses that are looking to expand.

The scheme was initially announced at the start of last year by Prime Minister David Cameron, with the stated aim of facilitating £100 million of ‘growth loans’ over the course of two years. In the last budget, Chancellor George Osborne announced that the commitment had been raised to £200 million.

The first phase will see a £30 million pot that will be aimed at SMEs looking to secure funding within the range of £500,000 to £2 million.

According to Keith Morgan, CEO of the British Business Bank, almost half (46%) of UK businesses have said that they would like to expand. Despite this, he claimed there was a gap in the market for firms looking for funding within that range.

At the time of the last budget he suggested that up to 500 businesses a year who were looking to scale up could be suitable for a growth loan. He also said that the British Business Bank was looking to replicate the “drive and dynamism” that was apparent in the UK’s start-up culture in the later expansion stage of the SME journey.

The initial £30 million will be made available via a partnership with Lloyds Banking Group. The British Business Bank does not issue loans itself but works with other financial institutions to facilitate access to funding, by means such as providing part-guarantees for loans.

Bank loans are not the only option for small businesses looking to scale up and alternative finance options are steadily becoming more popular.

According to recent research by the British Business Bank, £3.5 billion of equity investment was injected into UK SMEs during 2015. This may sometimes be easier to secure than more traditional debt-based loans. It might also be more manageable in terms of early stage cash flow as regular repayments are replaced by a stake in the business.

By Phil Smith

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