British Business Bank ENABLE Guarantee programme
25 October 2021
25 October 2021
There was an announcement from ThinCats and Citi last month, that ThinCats will provide up to £300 million additional funding for UK businesses through British Business Bank’s ENABLE Guarantee programme (Programme). This is the first transaction under the Programme from an alternative lender with a bank as a senior funder, which is significant for two reasons:
The announcement reflects what we're seeing as renewed interest in the Programme, which had seen over £900 million worth of live portfolios committed by the BBB by April 2019. Whilst this doesn't compare with the scale of the government's COVID 19 emergency loan schemes (which saw almost £80bn in value of facilities approved across CBILS, CLBILS and BBLS by the time those schemes closed), perhaps it was the success of those schemes which has encouraged lenders to look again at the Programme. Indeed ThinCats was accredited to the recovery loan scheme (seen as the successor scheme) in July 2021, before it returned to the BBB. So is it time for another look at the Programme?
The Programme is designed to encourage banks and non-bank financial institutions to unlock more lending to smaller businesses (SMEs) by reducing the amount of capital or junior funding required for such lending. Participating institutions are incentivised by a government-backed portfolio guarantee to cover a portion of a designated lending portfolio’s net credit losses in excess of an agreed ‘first loss’ threshold, which they receive in exchange for a fee.
Some of the key features of the Programme are summarised in the table below. We, at Ashurst, see significant benefits of the programme for the right type of lenders, looking to increase their financing of UK-based small and medium-sized enterprises.
With special thanks to Sarah Curry and Matthew Sharpe for their contribution.
At Ashurst, we are experienced in advising clients on BBB schemes and programmes across the board. If you would like to know more, please reach out to Lee Doyle or your usual Ashurst contacts.