Major bank launches £500m growth fund for businesses

The fund will be used to support sectors where high-spec machinery and innovations, such as automation and other technology, can help businesses boost productivity and growth in a competitive marketplace.

Businesses will be able to use asset finance to gain quick access to funds needed to buy expensive equipment, without damaging their working capital.

Asset finance works by allowing businesses to buy assets, such as machinery or technology, and spread the cost over their lifetime.

The growth fund will benefit SMEs and mid-market businesses in the manufacturing, construction, agriculture and transport industries, where the requirement of costly assets, such as machinery and vehicles, is common.

Research carried out by Lloyds Bank found that inadequate investment was one of the key obstacles preventing businesses from improving productivity, behind skills shortages and onerous regulation.

Ben Stephenson, managing director of SME at Lloyds Bank Global Transaction Banking, said: “The pace of technological change is constantly challenging important UK sectors to invest in growth to remain competitive.

“But businesses need to be able to achieve this without damaging their access to working capital.”

Gareth Oakley, managing director of SME at Lloyds Bank Commercial Banking, added: “The UK’s low level of productivity compared with its G7 peers remains a challenge, and it’s crucial we work closely with businesses to ensure they have the tools they need to make efficiencies and grow.

“This asset finance fund shows our commitment to helping businesses in Britain prosper.”

One business that has used asset finance to increase production is animal feed manufacturer Dodson & Horrell, which invested £3.5m to automate its processes to create a single factory and distribution centre, and now expects to double the size of its canine business within five years.

Bridging & Commercial approached commercial brokers to gauge the market’s reaction to the announcement.

Nathan Ellis-Calcott, director at Thistle Finance, believed the fund should be welcomed.

“Any initiative that helps companies to grow without hindering their cash flow and working capital should be welcomed.

“The question, as ever, comes down to the ability of firms to access this fund and the terms being offered.

“It goes without saying that any business considering commercial finance should seek independent advice from a relevant professional."

Kevin Thomson, sales director at Connect for Intermediaries, claimed it was really good news for the business community.

“Anything that helps the expansion of businesses is not only good for business, but also for the UK economy as a whole.

“It is yet another positive for both specialist and commercial finance and should help businesses with the holy grail of increasing productivity.”