Help to Grow: 24th March 2016

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
The help to grow (“H2G”) pilot programme was announced by the Prime Minister in February 2015. Drawing on research undertaken by the British Business Bank (“BBB”), Government committed to address an identified finance gap for fast growing, innovative SMEs by using the Government’s balance sheet to guarantee loans by private lenders and by co-investing public money alongside private money to bring new lenders to the market. These SMEs are vital to the UK economy and are major drivers of employment and wealth for the country. Ensuring they have access to the right type of finance at the right time is essential to ensure they maximise their growth potential.

Following the pilot announcement and extensive market engagement, BBB has developed three products to test in tackling the identified gap. These are two guarantee products and an option for co-investment in funds. The first contract with a delivery partner will be exchanged shortly. The pilot is expected to last two years and anticipates supporting in the region of £200 million total new lending under H2G. The pilot will be evaluating the appropriateness of the design of the three lending products within H2G alongside lenders’ ability to successfully originate eligible H2G loans.

H2G will support SMEs seeking growth investment between £0.5 million to £2 million for developing new products, processes or services, research and innovation, and expansion into new markets.

The two guarantee products being piloted will give rise to a contingent liability which under managing public money principles require notifying to both Houses. These liabilities will arise when beneficiary SME’s default on their loan repayments and the delivery partner is unable to recover the capital despite reasonable commercial steps being taken to pursue the debt. A departmental minute has been laid concurrently in both Houses which provides further detail on these liabilities.

Subject to the findings of the pilot programme, the intention will be to roll H2G out further in order to ensure innovative, ambitious and growing UK SME’s can continue to be able to access this vital funding.