Rural Asset Finance agrees up to £120m funding facility from NatWest and BCI Capital, supported by the British Business Bank
The British Business Bank has agreed an ENABLE Guarantee with agricultural lender, Rural Asset Finance. The transaction is anticipated to support a portfolio of up to c.£120m to smaller rural businesses across the agricultural sector in the UK through a combination of asset finance and term lending.
The funding is being provided by NatWest Bank and BCI Capital, with the British Business Bank guaranteeing a portion of the funding provided by NatWest. The funding is aligned with Rural Asset Finance’s focus on sustainability and includes a margin adjustment if sustainability performance targets are met.
The British Business Bank’s ENABLE Guarantees programme is designed to encourage banks and other lenders to increase their lending to smaller businesses by reducing the amount of capital or junior funding required for such lending. Under an ENABLE Guarantee, the UK Government takes on a portion of the risk in a transaction supporting debt finance to smaller businesses, in return for a fee.
Rural Asset Finance was established in 2019 and is a specialist direct lender to British farmers helping to fund, diversify and future-proof rurally based businesses. Financing options can be flexible combining equipment finance and business loan options to tailor each solution for the borrower.
Michael Strevens, managing director, Structured FI Solutions, British Business Bank said: “This transaction with Rural Asset Finance builds on the work we have done through the ENABLE Guarantees programme to support the provision of funding to businesses in the agricultural sector. Collaborating with established capital providers like NatWest and BCI Capital allows us to increase the availability of funding for non-bank lenders such as Rural Asset Finance and, through them, the smaller businesses they lend to.
“In addition, by including a pricing incentive linked to sustainability objectives we hope to see further expansion of small business lending in sustainable areas, including farm renewable energy installations.”
Matthew Smart, managing director, Rural Asset Finance said:“With the support of the British Business Bank’s ENABLE Guarantees programme, alongside lenders NatWest Bank and BCI Capital, this enhanced facility carries an attractive credit margin, which gives Rural Asset Finance a highly competitive offering to our borrowers. As a result, we are now best placed to support farmers driving efficient high-tech food production, as well as those diversifying into alternative revenue streams. Food production and diversification on UK farms are key to ensuring a healthy, robust future for the industry and the wider rural economy in the current challenging geo-political landscape.”
Matthew Whittle, relationship director, NatWest Bank: “We’re pleased to support Rural Asset Finance in securing this new facility, backed by the British Business Bank’s ENABLE Guarantees programme. The provision of the Guarantee alongside the Sustainability Linked features, will help unlock capital, reduce costs and ultimately increase access to competitive funding for agricultural and rural businesses across the UK.
“We look forward to working with Rural Asset Finance and the team as they build on prior success and, in particular, augment their sustainable financing initiatives. The ENABLE Guarantees programme provides an innovative platform and opportunity for NatWest to accelerate funding to non-bank specialist lenders, underscoring our commitment to both the sector and UK SME’s.”
Will Haynes, investment manager, BCI Capital said: “BCI Capital is committed to supporting innovative, specialist lenders who are making a tangible difference in underserved sectors of the economy. Rural Asset Finance plays a crucial role in enabling growth and resilience across the UK’s agricultural and rural business landscape, and this facility – backed by the British Business Bank’s ENABLE Guarantee – will further strengthen their ability to support farmers and rural entrepreneurs. We are proud to be part of another partnership alongside NatWest – in this instance helping to drive forward lending aligned with sustainability and rural economic development.”