BBB invests £16.5m in UK asset financier

The revolving credit facility will assist Kingsway in extending its leasing capacity to up to £25m. Since 2013, the BBB has invested £120m across six UK-based asset financiers.

The British Business Bank (BBB) has set up a £16.5 million (€19.7 million; $21.7 million) revolving credit facility with UK-based Kingsway Asset Finance, a firm specialising in providing leases for small and medium-sized enterprises (SME).

The latest investment from the bank is more than three times [delete] what it invested in the asset financing firm in February 2015 and is aiming to increase Kingsway’s overall leasing capacity to up to £25 million.

Kingsway was established in 1992 and is headquartered in Wilmslow, close to Manchester. Kingsway typically provides financing backed by IT equipment and machinery, but it has stated it can be flexible on the type of assets borrowed against. On its website, the firm said it primarily focuses on the credit quality of the borrower when committing to a loan rather than the value of the asset.

Under the terms of the revolving facility, Kingsway has to demonstrate that the capital will leverage additional lending.

Keith Morgan, BBB chairman, said: “We see asset finance as an increasingly important option for smaller businesses looking to grow and invest. We are keen to introduce more innovative ways to meet the growing demand for this type of finance, in particular leasing and hire purchase for plant and machinery investments.”

Adrian Anthon, managing director of Kingsway, said: “This facility will enable Kingsway to significantly increase our lending to small businesses across the UK.”

The UK asset finance industry is growing, according to the most recent annual report published by the Financing & Leasing Association (FLA), a trade body representing the sector. In 2015, leasing and hire purchase was up 12 percent compared with the previous year. That trend has continued into 2016 as the FLA noted that the asset finance business grew by 9 percent in May compared with the same period in 2015.

Through the Investment Programme, the BBB is on a mission to increase the debt financing options for UK SMEs. Since the programme was established in 2013, the BBB has invested more than £120 million across six asset financiers as part of this initiative.

The BBB also manages the Enable Funding Programme, which has agreed credit facilities valued at £200 million in total to three different financiers. These are: Henry Howard Finance (£51 million) LDF (£51 million) and Hitachi Capital (£100 million). The BBB works with the FLA on operating the programme, which “aims to improve the ability of independent asset or lease finance providers to access more competitive funding via the capital markets”.