British Business Bank has increased its funding facility with specialist lender Performance Finance Limited by £30m, giving small businesses another source of vehicle and asset finance to draw on as banks stay cautious on lending.
British Business Bank has increased its funding facility with Performance Finance Limited by £30m, according to an announcement from the government-owned bank. The extra money sits on top of an existing facility and is earmarked for Performance Finance Limited to lend on to smaller business customers, rather than for the bank to lend directly.
For readers unfamiliar with the mechanics, this is how a lot of SME lending actually works. British Business Bank does not usually hand cash straight to a small business owner. Instead, it funds specialist lenders like Performance Finance Limited, who then use that headroom to write more loans and leases for firms that a mainstream bank might turn away.
That matters because access to asset finance has been a sticking point for years, much like the hurdles covered in our guide to refinancing a commercial property. Smaller firms buying vans, machinery or specialist vehicles have often found high street banks slow or unwilling to fund equipment purchases, a gap made sharper by SMMT’s call for a rethink of the electric van mandate, pushing them towards brokers and alternative lenders that refinance commercial property and equipment instead.
This move follows a pattern seen elsewhere in the market, including the Bank of England’s trials of digital currencies for SME trade finance. Our coverage of Time Finance’s £55m takeover by Ultimate Finance’s parent showed how consolidation and fresh capital are reshaping who funds SME equipment purchases. A bigger facility for Performance Finance Limited is a smaller, quieter version of the same trend: more money flowing into specialist lenders that serve businesses banks find harder to price.
It is worth being clear about who this helps, much as it’s worth checking how everyday banking has changed too, including the shift to Countingup and Griffin powering MoneySuperMarket business banking. It is good news for businesses that already borrow, or plan to borrow, through Performance Finance Limited or similar specialist lenders for vehicles and equipment, a need underlined by the SMMT’s record electric van registration figures, which show fleets under pressure to fund an upgrade. It does nothing directly for firms relying on overdrafts, invoice finance or commercial mortgages, where separate funding routes and providers apply, as we set out in our look at Recognise Bank’s five-year fixed commercial mortgage.
British Business Bank has not published pricing, eligibility criteria or a start date for lending drawn from the increased facility, so businesses interested in borrowing should approach Performance Finance Limited directly to ask what has changed for new applicants.
Cash flow pressure is still the backdrop for all of this. Our recent piece on late payment from the UK’s biggest firms is a reminder that funding gaps often start with unpaid invoices rather than a shortage of lenders, so asset finance is only part of the fix for firms under strain.
What to do next
If your business needs vehicle or equipment finance, ask any lender you approach, including Performance Finance Limited, whether the increased facility has changed their rates or turnaround times. It costs nothing to ask, and specialist lenders backed by British Business Bank can sometimes move faster than a high street bank on asset-backed lending.
