British Business Bank Backs SME Growth with Funds to Harwood
Harwood Private Capital has received £40m (US$53.1m) in funding from the British Business Bank (BBB).
The new round of financing brings the total pot of funding in the Harwood Private Capital UK Fund II to £120m (US$159.3m), with aims of spreading the capital to back smaller and lower mid-market private companies in the UK.
Speaking to Finance Chief exclusively, Adam Kelly, Managing Director, Debt & Regional Funds, British Business Bank says: “Debt funds are an important source of growth capital for smaller businesses, particularly for companies seeking an alternative to traditional bank lending, private equity or M&A transactions.”
The BBB has committed a total of £75m (US$99.5m) to Harwood, with the latest financing topping up the previous £35m (US$46.4m) the bank dedicated to Harwood’s inaugural fund Harwood Private Capital UK SME Fund, in 2020.
The capital can be used to help smaller businesses pursue avenues such as expansion, acquisition and shareholder transitions.
Access to flexible finance helps these businesses create jobs in local economies across the UK.”
Backing the UK economy
BBB aims to improve access to finance through dedicating the capital to Harwood, adding to its overall mission to plug gaps in the market for growth and scale-up capital.
According to money.co.uk, there are approximately 5.68 million SMEs in the UK - making up a grand total of 99.85% of all business in the UK.
Capital for smaller businesses can provide fresh life into community assets, provide local jobs and support vital family-owned businesses across the nation.
Adam continues: “Small businesses are the backbone of the UK economy. For ambitious SMEs and family-owned businesses, flexible debt finance can provide the capital needed to invest and grow at critical points in their development.
“This is particularly important in sectors such as Professional and Business Services, where firms need to invest in talent, technology, or expand into new markets. Access to flexible finance helps these businesses create jobs in local economies across the UK.”
- BBB was founded in 2014 and is owned by the British Government
- Harwood Private Capital has received £75m (US$99.5m) from BBB to date
- BBB committed an initial £35m (US$46.4m) to the Harwood Private Capital UK SME Fund in 2020
- Harwood Private Capital UK Fund II now has a total of £120m (US$159.3m) to help UK SMEs
- SMEs make up 99.85% of UK businesses
BBB and the budget
The latest commitment is one that follows John Healey’s Budget announcement, declaring that the BBB has deployed £39bn (US$51.8bn) of public funding, guaranteeing £16bn (US$21.28bn) of lending and mobilising an additional £23bn (US$30.5bn) in private sector capital to date.
According to the bank, in 2025/2026, it supported smaller businesses with access to finance totalling £9.4bn (US$12.4bn).
This was divided up by £1.3bn (US$1.7bn) of public funding, £4.3bn (US$5.6bn) of private capital crowded in by the Bank and a further amount of lending guaranteed by the bank of £3.7bn (US$4.9bn).
It provided benefits to 38,000 UK businesses.
BBB partners:
Harwood Private Capital: Having backed Harwood Private Capital since its inaugural fund, the British Business Bank committed an additional £40m (US$53.1m) to expand their long-standing partnership.
UK Export Finance: BBB joined forces with UK Export Finance to launch a joint lending scheme supporting smaller British exporters across all sectors earlier this year.
NatWest: The British Business Bank partnered with NatWest and Capital on Tap through its ENABLE Guarantees programme. By backing a portion of NatWest’s senior financing commitment, the Bank enhances NatWest's funding capacity for Capital on Tap, unlocking £200m (US$265.5m) for SMEs nationwide.
AegonUK: Aegon UK serves as the cornerstone investor in the British Business Bank’s £200m (US$265.5m) British Growth Partnership Fund.
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Executives
Adam Kelly
Managing Director, Debt & Regional Funds