In essence, the objective of this new variant is to enhance the financial assistance available to small businesses in the UK seeking funding under the Recovery Loan Scheme (RLS), utilising a wide array of business assets.
This addition to the RLS comprises various variants, including term loans, revolving credit facilities, invoice finance, and asset finance, all designed to facilitate access to finance for UK businesses as they pursue investment and expansion. The development of the asset-based lending variant involved close collaboration between the Bank's Guarantee and Wholesale division, UK Finance, and asset-based lenders.
Asset-based lending enables lenders to extend loans secured by business assets such as inventory, accounts receivable, equipment, or other owned properties. Accredited asset-based lenders will administer the Recovery Loan Scheme asset-based lending, providing additional financial support beyond commercial capacity.
According to the official press release, as of 30 September 30 2023, businesses have accessed over 20,000 facilities, totalling GBP 4.3 billion, through the initial two iterations of the Recovery Loan Scheme. The third iteration, launched in August 2022, continues to facilitate access to finance for UK businesses.
Representatives from UK Finance emphasised the significance of the asset-based lending variant within the RLS, highlighting the collaborative effort between UK Finance and the British Business Bank in its development.
Officials from British Business Bank expressed satisfaction with the diversification of support for smaller businesses through the RLS. The introduction of the asset-based lending variant is expected to provide additional financial options for UK small businesses, with established asset-based lenders encouraged to apply for accreditation.
In December 2023, British Business Bank has increased its existing ENABLE Build facility in collaboration with United Trust Bank (UTB) by an additional GBP 100 million. This supplemented the initial GBP 250 million transaction established in April 2021, resulting in a total facility size of GBP 350 million.
According to the official press release, United Trust Bank has, to date, disbursed over GBP 830 million in funding to smaller housebuilders through the ENABLE Build programs. The expanded facility is anticipated to enable UTB to extend lending by an additional GBP 700 million to these businesses.
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