The government has confirmed its additional £200 million investment in the British Business Bank, which Growth Business revealed last month.
This additional Treasury funding is meant to directly replace EU funding for SMEs as the UK leaves the EU. In 2017 alone, the EU’s Enterprise Investment Fund (EIF) made €685.2 million available for investing in UK small businesses.
Last year it emerged that the EIF, a subsidiary of the European Investment Bank, had cut deals with UK venture capital and private equity groups by more than two-thirds as a response to Brexit. The UK had previously been the main recipient of EU venture capital funding.
Keith Morgan, CEO of British Business Bank, told Growth Business in March that he was confident the government would make even more money available above-and-beyond the Treasury’s £200 million announced today (April 17).
“There’s been concern in the market that the European Investment Fund, which had, up till that point, been the largest investor in UK business funding, has played a diminishing role since the referendum vote. What the Chancellor has said is that the government would backfill any gaps left by the withdrawal of the EIF, which has translated into an additional £200 million released by the Treasury,” said Morgan. “And there’s a spending review to come. The Chancellor has been clear about that in his speeches.”
To date, the government has backed the BBB to the tune of £6.2 billion, of which £2 billion has been drawn down, supporting 82,000 smaller businesses. Success stories include artificial intelligence firm Quantexa and tech company Improbable Worlds, one of only 14 UK companies which have achieved $1 billion “unicorn” status.
One third of the BBB’s money in the market goes towards guaranteeing bank loans while the other two thirds are loans and investments in the market.
Robert Jenrick, the exchequer secretary, said: “The UK is creating more start-ups and attracting more venture capital funding than any other European country, but we want to do more to encourage our small businesses and entrepreneurs can thrive.
“That’s why we are injecting a further £200 million into the British Business Bank, specifically to back businesses that are starting out and scaling up.”