The state-owned British Business Bank has agreed to provide £20m to fund lending to small and mid-sized companies by ThinCats, a Midlands-based online lender that specialises in larger loans. The economic development bank, whose role is to increase the supply of credit to smaller companies, has previously provided similar funding lines to other online lenders including Funding Circle, MarketInvoice, Liberis and Zopa.
The commitment, provided through British Business Investments, a commercial subsidiary of the bank, will be used to part-fund a range of loans agreed by ThinCats. The lender is indirectly controlled by the British Aerospace pension fund, which also funds loans through ThinCats. The lender says it now has more than £800m available to fund small business loans across all regions and sectors, from £250,000 to £10m. Its funds are provided by both institutions and private individuals.
ThinCats' borrowers range from property developers to businesses looking to invest in their growth. It has recently funded several management buy-outs of smaller companies – a type of deal previously dominated by venture capital trusts. However, rule changes in 2015 forced them to abandon this type of transaction because the Treasury considered it too low-risk to merit the generous tax breaks that VCTs enjoy.
Ravi Anand, managing director of ThinCats, said, "British Business Investments' funding commitment constitutes a great success for our business, and we are looking forward to working together with the team. Our increasing diversity of institutional funding sources allows us to address the full spectrum of our target market and this new commitment plays an important role in this context."
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