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british business bank

British Business Bank: What is it and what does it do?

10 Jun 2020

Chris O'Shea | Business Banking

What is the British Business Bank?

The British Business Bank is the UK government’s economic development bank, established in 2014. It is entirely owned by the government, however, it is managed independently. 

The mission for this establishment is to increase the supply of credit available and given to small businesses (SMEs). They aim to enable finance markets for smaller businesses to work more effectively for them to prosper further through all stages of their development, from startups to financing a scale up. 

The British Business Bank aims to allow small companies to grow, prosper and continue to build UK economic activity by ensuring that finance markets for smaller UK businesses work more effectively. This is working towards helping to make the UK the best place in Europe to start, grow and finance a business.

Over the next five years they aim to unlock up to £10bn specially for lending and investing in smaller UK businesses. A fundamental objective of the British Business Bank is to raise awareness of their various finance options, encouraging more lending and investment within the private sector as well as increasing the quantity and diversity of finance available. 

British Business Bank is a development bank which is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA) and is wholly owned by HM Government. 

What does the British Business Bank do? 

The British Business Bank is the epicentre of expertise on small business finance across the UK using taxpayers resources efficiently within a robust risk management framework whilst also providing advice and support to the UK government. 

The bank has a key objective to help small business enterprises (SMEs) as much as they can to be able to thrive in the current financial economy in the UK. This involves seeking finances more readily available to these businesses and ensuring that there are options to obtain finance that are best suited to the needs of the business. They aim to increase the supply of finance available to small businesses significantly, especially where there is a gap in the market for them to receive the funding they need. This involves the BBB working to identify the imbalances in access to financial capital for small businesses across the UK and working to significantly reduce them.

The bank brings its expertise to many different financial markets and puts government funding towards smaller business finance markers. They do not lend or invest in anyone or any businesses directly. Instead they work with various banks, leasing companies, web-based platforms and venture capital funds. They have over 130 partners to help financial lending become more accessible and primarily more beneficial for small businesses.

Businesses and individuals cannot access any capital they need or come straight to the British Business Bank for any type of finance. They apply for finance through BBB partners who, because they work with the British Business Bank, can invest more as well as lend more, especially to younger, less established and faster growing companies.

What types of loans does the British Business Bank offer (2020)?

Start up loans

Start up loans are personally designed loans that are used to start a new business or grow an existing one within the UK. This type of loan is unsecured, which means there is no need to put forward any type of assets or guarantees to support an application.

They differ from small-business bank loans in that they are personal loans for business purposes funded by the UK government. Borrowers can often access between £500 to £25,000, repayable over one to five years at a fixed interest rate.

Bounce Back Loans

The Bounce Back Loan Scheme (BBLS) is a fairly new scheme designed to provide financial support to businesses across the UK that are losing revenue and need access to immediate finance especially during the Coronavirus outbreak. 

This scheme is available for SMEs, Accredited Lenders and Prospective Lenders. Due to the pandemic, many businesses are seeing their cash flow disrupted as well as losing revenue. Businesses can benefit from £50,000 or less in finance from this particular scheme however, this scheme is a part of a wider package of government support for UK businesses as well as their employees. The borrower will always remain completely liable for the debt. The scheme guarantees the lender to encourage them to lend as they merely give the lender a full 100% government-backed guarantee against the outstanding balance of the facility. 

The current length of the loan is six years but early repayment with this loan scheme is allowed without any early repayment fees. Many secured loans often need security, however, due to the current economic circumstances, lenders are not permitted to take personal guarantees or take recovery action over a borrower’s assets. There is also no fee to access the scheme for both businesses and lenders.

Coronavirus Business Interruption Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) is a loan scheme that has been put in place to support smaller businesses (SMEs) all over the UK that are losing revenue as a result of the COVID-19 pandemic outbreak. 

CBILS is a scheme that is currently offering lending to small businesses with a turnover of up to £45m. After the launch of Bounce Bank Loan Schemes, these CBILS will not be available for new loans and overdraft facilities of £50,001, or less, any longer. They will, however, remain available for asset and invoice finance facilities below £50,001. The government will make the payments to cover interest and lender-levied fees for the first 12 months under CBILS.

Over the course of the pandemic, CBILS have been significantly expanded and many changes have been made to the scheme and its eligibility criteria in order to ensure that a larger number of even smaller businesses across the UK that are heavily impacted by the pandemic crisis can access the funding they need.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) financially aids medium and larger sized businesses affected by the current Covid-19 outbreak. They provide finance to UK businesses with a turnover of more than £45m and that are struggling with the disruption to their profits and cash flows due to the lost revenue during the pandemic.

HM Treasury prompted several changes to the CLBILS scheme after their announcement on 19 May. The maximum amount available through CLBILS to a borrower of a large business has now increased from £50m to £200m.

Finance is available in the form of:

–  Term loans
–  Invoice finance
–  Asset finance
–  Revolving credit facilities (overdrafts)


Finance terms are from three months to three years and the borrower remains 100% liable for the debt. For this type of loan, no form personal guarantees are necessary for facilities below £250,000. Facilities above £250,000 may require a personal guarantee.

Future Fund 

The Future Fund is a government scheme developed in partnership with the British Business Bank and was made specifically to combat economical issues to various businesses due to the Coronavirus outbreak. The fund issues convertible loans from £125,000 to £5m to innovative, contemporary UK companies that typically rely on equity investments and are currently facing financial difficulties due to the effects of COVID-19. The scheme is designed to help these companies through this current economic disruption so they are able to continue their growth and reach their full economic potential.

Usually businesses struggle to access any government funded support because they are either pre-revenue or pre-profit which is where these convertible loans provide a suitable solution to financial difficulties.

This scheme launches applications in May 2020 and will initially be open until the end of September 2020.

Becoming a partner to the British Business Bank

The British Business Bank has a number of opportunities for partnering if you are a finance provider who funds small businesses in order to unlock greater and more diverse funding. 

The bank works in conjunction with many private sector partners in order to access more finance from a number of providers through a wider range of products. It is important to note that the British Business Bank does not provide funding directly to any individuals or small businesses. 

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