The scheme is designed to create new private sector sources of lending for small and medium sized businesses, to fill the gap left by the reduction in bank lending. It has so far raised £5 of lending for every £1 of taxpayers’ money.
Six new lending funds have been created by the scheme and are backed by investors that previously lent to large businesses but are now re-directing their money to medium sized companies. A further seven non-traditional sources of lending for smaller businesses have also been supported, such as peer-to-peer platforms and supply chain finance providers.
So far, 18 medium-sized businesses have received a total of £827 million of lending through the scheme. These businesses have an average turnover of £80 million and around 550 staff. A further 880 small businesses have also received loans totalling another £50 million.
The Chancellor today visited Bond Aviation in Gloucester – one of the companies to have received loans. Bond Aviation provides air ambulance, search and rescue, and other helicopter support, and the loan from the Business Finance Partnership will help the business to expand in the UK.
Companies to have received loans include:
- Bond Aviation (Bond), based in Gloucester and Aberdeen. Part of the UK-based Avincis Group, Bond companies in the UK operate a mixed fleet of over forty-five helicopters and employ around 630 staff. The loan they have received will refinance existing lending more flexibly, releasing cash flow to grow the business. In the next 12 months Bond companies in the UK intend to invest many millions in new medium and heavy helicopters, as well as hiring and training skilled staff and expanding their bases around the UK.
- Pure Gym, a provider of affordable gyms offering 24 hour gym access without a contract, based in Leeds. There are over fifty operating Pure Gyms with over 250,000 members across the UK. The loan they have received provides longer-term finance to fund their ongoing plans for rapid growth.
- Cath Kidston, a distinctive international lifestyle brand providing fashion accessories, homeware, clothing and children’s products, which is this year celebrating its 20th birthday. There are currently 58 Cath Kidston stores in the UK and Ireland and 60 stores overseas.
- Bramley & Gage, a manufacturer of gin and fruit liqueurs based in Somerset. The £25,000 loan they have obtained will allow them to purchase a new gin still to increase production.
Chancellor of the Exchequer, George Osborne, said:
The Business Finance Partnership shows how the government is opening up brand new sources of finance for small and medium sized businesses.
By showing that we have the confidence to invest in great British businesses, we have helped persuade investors to lend five times as much money as the government alone is putting in.
It is a fantastic success story: the businesses receiving the loans can grow and invest, while the lenders are building a whole new private sector market which will drive further lending to support the economic recovery.
James Drummond, CEO of Avincis Group, Bond’s parent company, said:
The missions we fly save lives, and we are delighted to have received such support from the Government’s Business Finance Partnership scheme. We are investing many millions in the UK on recruiting and training staff, buying new helicopters and increasing our services. Last year Bond flew 15,000 air ambulance missions and carried over 160,000 people offshore, and we look forward to continuing to grow our business in the UK.
Christophe Evain, CEO of ICG, one of the fund managers to have received investment from the Business Finance Partnership, said:
The UK Government has taken the lead in Europe with initiatives to boost lending to small and mid-sized businesses. The Business Finance Partnership is injecting much needed additional lending into the UK economy and ICG is pleased to be deploying £163 million of it as part of our £1.5 billion new direct lending fund.
Direct lending funds are gaining real traction with borrowers that are looking to source long-term capital to support the growth of their businesses. We see that direct lending funds are an attractive alternative source of funding to traditional bank loans and that they are here to stay.
Anil Stocker, co-founder of MarketInvoice, one of the non-traditional lending channels to have received investment from the Business Finance Partnership, said:
We were honoured to have been chosen to receive funding from the BFP and the impact that the initiative is having on the SMEs using MarketInvoice is already proving hugely significant. Every day, we’re seeing the Government’s investment directly help businesses in the real economy; businesses that are growing, hiring and forging ahead with new product and technological innovation.