British Business Bank commits record £2.3bn in SME finance to the market in 2023/24, but…

Louis Taylor, CEO, British Business Bank, said: “In the last year, the British Business Bank has performed above expectations against a backdrop of challenging market conditions, making funded commitments of £2.3bn across our programmes. The impact of the activities we carried out in 2023 is expected to be the creation of 39,400 additional jobs and £8.4bn of gross value added (GVA) over the life of the finance.”

“As suggested last year, the continuing challenging market for investments has resulted in a loss of £122m for 2023/24. However, this is largely an unrealised loss, reflecting short-term falls in the book valuation of long-term investments, rather than actual cash losses. Significantly, valuations remain 1.35 times our original cost, and we would expect them to rise further over their five-to-10-year investment period as we enter a period of recovery and economic growth.

Performance against 2023/24 key performance indicators

The Bank’s performance against its measured objectives in the last financial year was as follows:

• Driving sustainable growth: ensuring smaller businesses can access the right type of finance they need to start, survive and grow – £777m of debt commitments, versus a target of £713m
• Backing innovation: ensuring innovative businesses can access the right capital to start and scale – £1,527m of equity commitments versus a target of £1,331m
• Unlocking potential: unlocking growth by ensuring entrepreneurs can access the finance they need regardless of where and who they are – £1,782m of gross deployment outside of London versus a target of £1,080m
• Building the modern, green economy: financing ground-breaking solutions to climate change and helping smaller businesses transition to net zero so they thrive in a green future – The Bank published its first Task Force on Climate-related Financial Disclosures (TCFD) and undertook first submissions under both the Principles of Responsible Investment (PRI) and the UN Global Compact (UNGC) within the 2023/24 financial year, meeting its target of delivering required sustainability reporting.

 The British Business Bank’s impact in 2023

For the first time, the British Business Bank has published an Impact Report which sits alongside its Annual Report and Accounts. In calendar year 2023, the Bank deployed a total of £6bn of finance into smaller businesses in 2023 – £3.5bn of public funding with an additional £2.5bn of private capital leveraged alongside. This enabled the Bank to:

• Fund 23,100 smaller businesses, 84% of which were outside of London
• Provide total funding of £2.9bn to the Nations and regions outside of London
• Support equity deals accounting for 18% of all 2023 UK smaller business equity investment

The expected impacts over the life of this finance are:

• The creation of 39,400 additional jobs
• £19.8bn of additional business turnover, equivalent to an extra £8.4bn of Gross Value Added (GVA)

Other key highlights

• 4.5% five-year adjusted return on average capital employed across commercial and mandated programmes
• In-year guarantee commitments of £1,725m, versus a target of £1,150m-£2,110m
• £5.7bn of debt finance supported as at 31 March 2024
• £10.6bn of equity finance supported as at 31 March 2024
• 98.7% of stock of finance delivered outside the ‘Big 5’ banks
• British Patient Capital made new commitments of £382m in 2023/24
• British Business Investments made new commitments of £591m in 2023/24
• The Start Up Loans programme now has its first ‘unicorn’: Sports brand Castore was a £40k loan recipient that is now valued at more than US$1bn.

Stephen Welton, Chair, British Business Bank, said: “This is an especially exciting time in the Bank’s development, with more being asked of us at a time when driving longer-term investment to support the growth economy is so critical. This is testament to what we have built over the last ten years.

“After a strong year for the Bank in challenging markets, I look forward to working with the Board and the executive leadership team, and other key stakeholders, as we look to increase the scale, effectiveness and impact of the Bank, crowding in private investment and institutional capital for innovative, high growth firms to boost economic growth across the UK.”