Investment Programme
Guidance for Investment Proposals

Inviting investment proposals to support lending to small and medium-sized enterprises (SMEs).

The Programme has invested over £524 million alongside private investors to address long-standing gaps in finance markets for smaller businesses by promoting greater choice in the supply of lending.

We continue to welcome new applications. Please see our How to apply section below for details on the application process.

Investment Programme objectives

The Investment Programme will invest in those new and established lending channels best able to meet 4 key objectives:

  • increase the number of debt finance markets available to smaller businesses
  • mobilise new funding from private sector sources to support lending to smaller businesses
  • channel finance to smaller businesses in an effective, appropriate and responsible manner
  • expand the total amount and / or types of debt funding available to smaller businesses

These objectives are closely aligned to the goals of the British Business Bank.

Types of investment British Business Bank Investments Ltd will make

Investments will be made across a wide range of lending channels and lending products. This will ensure that government promotes diversity of supply of lending to smaller businesses. These types of investment could include:

  • equity, equity-like and debt instruments in financial institutions
  • debt funds or asset backed lenders that lend directly to businesses
  • non-bank channels, such as supply chain finance, peer-to-peer lending and other lending platforms

Proposals will fall into 3 categories: Managed Investments, Direct Capital Investments and Expansion Capital Investments:

  • Managed Investments: investment, alongside the private sector, into managed lending funds, or other managed lending vehicles that on-lend funds directly to SME borrowers
  • Direct Capital Investment: investments, alongside the private sector, either by way of equity or debt injection into lending businesses able to use these commitments to increase their lending activity
  • Expansion Capital Investments: investments either by way of long term equity or other form of risk capital to support the growth of companies active in SME lending markets
  • Applications which combine a request for Expansion Capital Investment alongside a Managed Investment or a Direct Capital Investment are welcomed. The allocation of funds between investment types will be determined by the quality of Proposals received

Who can apply

We welcome proposals from lenders who meet the following investment criteria:

  • those whose focus is to provide lending to viable businesses operating in the UK with turnover of up to £100 million
  • have a strategy based on the provision of debt finance, or debt-like finance where the majority of returns are debt-based
  • seek an amount of investment from BBBIL of between £10 million and £100 million
  • lend funds to SMEs within 3 years of BBBIL’s commitment, with preference for lending activity to commence quickly following any potential commitment
  • generate commercial returns, with BBBIL investing on terms and with a return and level of risk that would also be attractive to private sector investors
  • in the case of Direct Capital and Managed Investments, seek no more than 50% of their total investment requirement from BBBIL
  • in the case of Expansion Capital Investments, to the extent that Applicants’ growth plans require additional funding, Applicants will be required to provide evidence that this funding is in place or can be secured to support their business plan
  • where applicable, make sure that BBBIL will invest on equal terms with private sector co-investors (eg generate the same net return and share the same level of risk as private sector investors)
  • show they have a competent team, with enough expertise to carry out the proposal’s investment strategy
  • show transparent and appropriate investment, regulatory and tax structures

How to apply

The application process is currently open. The programme will remain open for new applications until the funds allocated to the programme are committed.

For details on the application process please refer to the following Guidance Documents:

BBBi 010215 33 Guidance for Direct Capital and Managed Investments

BBBi 010215 45 Investment Programme Guidance for Expansion Capital Investments

These provide detailed information about the application and assessment processes, and information required at different stages of the application process and should be read in conjunction with the Questions & Answers document:

BBBi 010215 34 Investment Programme QA for partners

How to find out more

If you have any queries about the Investment Programme in general, or questions in advance of submitting a proposal, please contact the Investment Programme team.