Raising Finance

Barclays and EIF unlock £100m worth of loans for UK SMEs to create blue chip firms

2 min read

23 October 2015

Former deputy editor

Access to finance from traditional bodies is difficult for British businesses, but a new European Commission-backed scheme has unlocked £100m worth of loans for the country's SMEs from the European Investment Fund and Barclays.

With banks reluctant to commit in recent years, small firms have been forced to embrace other financial options, such as peer-to-peer lending and crowdfunding.

As a result, eBay found that 72 per cent of the UK’s small companies said they’re no longer dependent on support from banks, while a further snub from 62 per cent came as they said they don’t need banks to achieve success.

Funding Circle is a prime example of a company providing alternative finance to SMEs. And on 20 October, the London-based firm – which has raised $215m from VCs in the past year – expanded beyond the UK and the US to begin serving Germany, Spain and the Netherlands.

In order to support SMEs in a market that has been failing them, the European Investment Fund (EIF) and Barclays have partnered in an agreement to provide £100m worth of loans to innovative SMEs over the next two years.

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Karl Nolson, head of debt finance, Barclays, said: “The UK economy needs innovation and innovators need finance. In offering Innovation Finance it enables us to provide additional funding solutions, supporting more businesses in the UK and the potential to be future blue-chip companies.”

The European Commission has backed the agreement. Its European Fund for Strategic Investment (EFSI) joint venture with the European Investment Bank Group, which was launched to overcome the investment gap, is supporting the campaign.

The loans are backed by the EIF’s InnovFin SME Guarantee, which works with banks to lend to SMEs with fewer than 500 employees.

“There is a thriving startup scene in the UK and this agreement under the Investment Plan for Europe will give those startups a helping hand. The Investment Plan is well underway and already helping small businesses grow,” said Jyrki Katainen, European Commission VP, who is responsible for jobs, growth, investment and competitiveness.