Fintech business lender MarketFinance has been awarded a £10m grant from the Capability and Innovation Fund (CIF), announced today by Banking Competition Remedies Ltd (BCR). The grant will be used to bring more choice and competition to the business lending industry
MarketFinance, a household name in the UK business community, has provided over £3b in invoice finance and business loans to thousands of UK businesses since 2011. They were accredited to lend under the Coronavirus Business Interruption Loan Scheme (CBILS), providing term loans from £50,001 to £150,000 and revolving credit facilities from £50,001 to £5 million to UK SMEs.
Anil Stocker, CEO of MarketFinance commented: “We are delighted to receive this award. We will provide more businesses with a unique digital offering that allows them to get on with the day-to-day running of their businesses, giving value back to customers and bringing some much needed competition to the business lending market.”
As part of the commitments in securing the grant funding, MarketFinance will extend their services to sole traders for the first time, reaching over 3.5m business owners. The fintech business lender will also provide more finance options and create a range of new partnerships with banks, fintechs and technology companies to deliver and enhance the experience of businesses.
Anil Stocker added: “This is a difficult time for UK businesses who are desperately trying to find the right finance to keep their doors open. We know that customers find it hard to manage multiple finance products across multiple providers; it’s why many stay with the incumbent banks. We will deliver a solution that radically reduces the complexity of managing finances for our customers, combining the product sophistication of a large lender, with the user-friendliness of a fintech.”
Anil Stocker continued: “We know smaller SMEs and sole traders make up more than 90% of companies in the UK, yet they are at the greatest borrowing disadvantage. Our risk models are much better at understanding and serving these businesses than those of conventional lenders. It is our ambition to get £1b out to thousands of underserved SMEs in the next few years.”
““We will match this £10m grant with money from our own funds to deliver this future vision. But, we can’t do it alone. We will be reaching out to a broad spectrum of partners who share our vision and ambition to deliver these goals. Our partnerships with Ebury, Barclays and Xero are testament to this. They are driven by agile people who deeply care and want to make a difference. We look forward to meeting more like-minded partners that will join us in this mission”
Richard Anderson, Chair of BCR, said: “We know that the winners and all SMEs in general face challenging times as we head towards winter with both the Covid-19 pandemic and the resulting economic challenges ahead. For that reason, it has been exciting to see a very wide range of innovative approaches from so many applicants to supporting all sizes of SMEs in their banking needs. It has been difficult to narrow the awards down to a small number of outstanding winners and BCR looks forward to monitoring progress as they implement their programmes”.
MarketFinance business highlights (2019/20):
• Updated brand name from MarketInvoice to MarketFinance to reflect launch of multi-product offering
• Secured £56m Series B round (debt and equity funding), attracting new investors Barclays and Santander
• Strengthened leadership team with a new CFO, CRO and CTO
• Accredited as a CBILS lender for term loans and revolving credit facilities
• In response to COVID-19 impact, launched a Furlough Advance product to ease cash flow pressure on businesses as they wait to be paid from HMRC
Separately, Virgin Money UK has been awarded a £35m grant following its successful application to the Capability and Innovation Fund, as part of the Royal Bank of Scotland Alternative Remedies Package. The grant means that businesses across the country will benefit from the development and enhancement of Virgin Money’s proposition, including scaling its successful regional franchise, more time with relationship managers and access to new digital technologies and services.
This award will support growth in the Group’s market share of cost-effective SME deposits and higher-yielding SME assets, while reducing cost-to-serve.
The Group presented an innovative proposition, ‘Working Capital Health’, which will transform its existing business current account offering into a financial wellness tracker for SMEs and combine dynamic views across an SME’s working capital cycle, with a set of working capital solutions, all backed up by proactive relationship management and a unique ecosystem of capability partners.
Virgin Money Business is due to launch in 2021 and the arrival of the Virgin brand into the business current account market for the first time, alongside additional large-scale investment, will enable the Group to become a true disruptor in the SME banking market and offer UK customers a meaningful alternative to the incumbent banks.
The Group has committed to a number of investments and growth targets, including:
- Launching ‘Working Capital Health’ for SMEs in 2021.
- Attracting 100,000 new SME customers by the end of 2025 (including 20,000 by the end of 2022)
- Increasing net lending to SMEs by an extra £2.2bn by the end of 2025 (including £0.5bn by the end of 2022) with more than £100m of new lending to customers pursuing environmental, social and governance aims.
- Investing an additional 150,000 hours of Relationship Manager time per annum from the end of 2022, enabled through an investment in data infrastructure, process digitisation and working capital analytics from the business current account.
- Developing a new partner ecosystem of relevant services for SMEs, incorporating proprietary and third-party functionality, to deliver services to help SME customers manage and grow their businesses.
- More than 80% of new customers to be based outside of London.
- Ensuring that diversity and inclusion is at the heart of our culture for both business customers and colleagues. The Group aims to ensure alignment between business growth and diversity of the people and communities we serve, and commits to maintaining over 40% of senior roles being filled by women.
- Grant funding to be matched pound-for-pound with investment by Virgin Money.
Gavin Opperman, Group Business Banking Director at Virgin Money commented:
“This grant award is an endorsement of the Group’s potential to shake up SME banking and a vote of confidence in our ability to invest in new capabilities. The grant will be used to accelerate our existing ambitious growth plans – we are investing in disruptive new capabilities and offering customers the best and most digitally-advanced business bank across the country alongside the globally iconic Virgin brand that’s synonymous with entrepreneurship and business growth.
“This award will transform our business current account into a financial wellness tracker, combining dynamic views across an SME’s working capital cycle, with a set of working capital solutions. It will all be backed up by an unparalleled ecosystem of FinTech partners and proactive support from our first-class team of experienced relationship managers, enabling us to fulfil our ambition to help business owners realise their potential and achieve their dreams”.
Gavin Opperman added:
“Working Capital Health will support SMEs with the wave of challenges they are facing, going beyond lending to improve their working capital and encouraging more efficient use of cash to maintain sufficient liquidity to operate. We are evolving the business current account to become the working capital wellness tracker that SMEs need, combining historical, current and future views of liquidity and working capital across the whole business cycle. It will provide working capital solutions to help SMEs optimise their cashflows and returns, as well as access to a suite of products, both provided by the Bank and from a newly-created marketplace of providers”.