British Business Bank continues its funding for leasing
Brian Cantwell examines the continuing EU central bank funding for UK leasing and the path ahead
The British Business Bank (BBB) has provided a £60m facility to Simply Asset Finance and a £25.5m facility for Tower Leasing at the start of 2018.
The transactions are made under the Bank’s Enable Funding programme, which aims to increase the supply of leasing and asset finance to UK SMEs.
Simply Asset Finance is a new non-bank lender which was setup in April 2017, led by former Close Brothers Asset Finance chief Mike Randall and backed by Cabot Square Capital.
Since it was established, the firm has arranged over £35m of financing across a variety of sectors – including manufacturing, construction, transport and recycling.
Broker and funder Tower Leasing was established in 1989, and is based in Bracknell, Berkshire.
The BBB, run by the UK government, has been busy supporting leasing as part of its aim to support British commerce since its foundation on 1 November 2014.
Former UK chancellor George Osborne made £1bn available to British business via the BBB in 2016 in his April budget.
Since then a series of funding deals have arrived via the BBB to the UK leasing market to support lessors.
In December 2017, the BBB provided £30m for ABL through Independent Growth Finance; in April 2017 Shire Leasing received access to a £34.7m funding facility; Henry Howard Finance was provided with a £51m facility for asset finance in May 2017; while LDF received the same amount earlier in February 2017.
BBB also has corporate investments arm, British Business Bank Investments, which returns profits to the taxpayer. This wing returned £40m profit off the back of a £110m investment in six leasing businesses in 2016; Kingsway Asset Finance; Haydock Finance; Shire Leasing; Ultimate Finance Group; Credit Asset Management Limited; Private and Commercial Finance (now PCF Bank).
There have been calls for the BBB to step up its investment in light of the uncertainty of funding withdrawals after Brexit. In May last year the FSB called for the UK government to replace the prospective loss of European Investment Bank (EIB) and European Investment Fund (EIF) credit.
No promises have been made yet by the UK government to fill the shortfall in funding that the European central funders were supplying to UK lessors. UK chancellor Phillip Hammond was expected to make the pledge but the news announcement was pulled after the Grenfell Tower tragedy unfolded in 2017, and has as yet not been restated.