Allica Bank, is launching a £100m funding round to help it meet the current high levels of demand for finance it is experiencing from UK businesses, and continue broadening services and product lines.
The bank, which received full UK banking authorisation in late 2019, has had over £1bn of enquiries from businesses in the aftermath of the Covid-19 pandemic.
The new funding round will allow Allica to accelerate its lending to UK businesses and also position it for any M&A opportunities that materialise in the non-bank lending market, which has been severely disrupted by Covid-19.
The announcement comes as Allica completes a follow-on investment of £26m led by its majority shareholder, Warwick Capital Partners.
Allica Bank’s chief executive, Richard Davies, joined the organisation from Revolut in August 2020 with ambitions to accelerate Allica Bank’s growth trajectory and fill the fast-emerging SME funding gap.
As the UK has come out of lockdown, substantial disruption has been seen in the supply of finance to established SME outside of the government-backed initiatives, such as the Coronavirus Business Interruption Loan Scheme (CBILs).
A recent survey of commercial finance brokers, conducted by Allica Bank, revealed that 63% had seen a significant reduction to the supply of business lending following on from the Covid pandemic.
Additionally, 98% of commercial finance brokers are concerned about business lenders’ credit appetite and liquidity over the next two years.
In June, Allica Bank said it was poised to unveil an asset finance division later in the year and appointed Richard Cameron to head it up.
Allica Bank, which is focused on supporting SMEs across the UK, has offices in Milton Keynes and London, alongside its regional business relationship managers. Of the lending it has provided to date, the vast majority has been to businesses outside the capital (95% of loans by value, and 97% by volume).
In recent years there has been a widening funding gap in the UK, with SMEs outside the capital finding it harder to secure funding and support from bank and non-bank lenders alike.
Richard Davies, chief executive officer, Allica Bank, said: “Established SMEs will be vital to the recovery and health of the UK economy, but it is clear that the supply of finance has been very badly damaged by Covid-19 outside of the government schemes.
“The time is now for Allica to scale up its operations to meet this business funding gap, bringing a blend of human relationships, deep lending expertise, and digital disruption.
“Together with potential acquisition opportunities of non-bank lenders impacted by the pandemic, we intend to create the leading SME challenger bank for the decade ahead.”