Through the Recovery Loan Program, British Business Bank Launches a New Type of Asset-Based Lending
The Recovery Loan Scheme now offers asset-based funding through the British Business Bank.
By utilizing a variety of company assets, the asset-based lending option seeks to increase the help available for small firms in the UK to get financing through the Recovery Loan Scheme.
In order to help UK firms’ access to financing as they aim to develop and grow, the Recovery Loan Scheme asset-based lending variant has joined the existing term loan, revolving credit facility, invoice finance, and asset finance variants.
This version and the innovation it will offer were developed in close collaboration with asset-based lenders and UK Finance by the Bank’s Guarantee and Wholesale division.
With asset-based financing, lenders can offer loans that are backed by the borrower’s possessions, including equipment, inventory, and accounts receivable. Established asset-based lenders will provide the asset-based lending for the Recovery Loan Scheme, and the British Business Bank encourages asset-based lenders to think about applying for accreditation.
Through the Recovery Loan Scheme asset-based lending, lenders are able to provide credit beyond what they can sustain profitably.
Businesses have accessed approximately 20,000 facilities through the first two rounds of the Recovery Loan Scheme, totaling £4.3 billion, as of September 30, 2023. Launched in August 2022, the Recovery Loan Scheme’s third incarnation continues to assist UK firms in obtaining financing.
Matt Davies, UK Finance’s Director of Commercial Finance, stated:
“The asset-based lending variant is an important addition to the Recovery Loan Scheme, and UK Finance and its members have been pleased to work with the British Business Bank on developing it.
“Financial services firms want to help businesses overcome challenges and realise their potential. With the asset-based lending variant now sitting alongside invoice finance and other versions of the Recovery Loan Scheme, lenders are providing a range of options to support businesses with their working capital and can help them unlock finance for growth and investment.”
Reinald de Monchy, Managing Director of British Business Bank’s Guarantee and Wholesale Solutions, stated:
“We wanted to diversify the support we provide for smaller businesses in the UK through the Recovery Loan Scheme, and we’re pleased to have made good on this promise with the launch of the asset-based lending variant. This innovation will unlock additional finance for UK smaller businesses, and we welcome any established asset-based lender to apply for this new product.”