A commercial loan fund is aiming to bridge the ‘funding gap’ for small and medium-sized enterprises (SMEs).
TFG Capital aims to provide cash flow and bridging loans to small firms from its initial fund of £7.5m.
The firm, launched by Reward Capital and Aldermore financier James Mortimore with offices in Leeds and Doncaster, expects the bulk of its transactions will be loans of between £50,000 and £3m to SMEs in the north, for periods of up to two years.
TFG Capital said it will consider applications from businesses that do not meet criteria for other lenders.
Mr Mortimore said the last 10 years has seen an increasing number of small businesses unable to access funding, despite needing money to grow.
He said: “Not only was it frustrating for the businesses that couldn’t access funding from their own banks, it was also a missed opportunity for the lender as the proposition often presented a good solid business deal for everyone, and that is the gap we are looking to bridge.”
Mr Mortimore said there are lots of businesses “with huge potential and limited options”. “We want to back these businesses and their owners by taking appropriate and measured risk for a sensible return, working with them to provide the funding they need,” he added.
Last month, the Bank of England confirmed lending to SMEs under the government’s Funding for Lending Scheme (FLS) fell by £435m in the second quarter of the year.
A report into alternative finance from Liberum Capital found the British economy could be boosted by £32bn if peer-to-peer lending was widely adopted.