UK-based business bank Allica Bank has launched a £100m funding round to support the high levels of demand for finance it is experiencing from British businesses.
The bank has decided to raise the capital after it received more than £1bn worth of enquiries from businesses in the aftermath of the coronavirus pandemic. With the extra cash, Allica will be able to increase its lending capabilities, as well as be in a better position for M&A opportunities in the non-bank lending space.
This funding round comes hot off the heels of the bank’s closure of a £26m funding round led by Warwick Capital Partners.
Allica received its full UK banking license in 2019.
The bank’s CEO, Richard Davies, joined the organisation from fellow UK challenger bank Revolut in August 2020. In his role, Davies aims to accelerate the growth trajectory of Allica and fill the gap in the SME lending space.
As the UK still tries to cope with the impact the coronavirus has caused, many SMEs have been seeking loans, including the government’s initiative the Coronavirus Business Interruption Loan Scheme (CBILs).
There are certain issues with these types of loan schemes, one which Starling Bank witnessed after it was hit with major backlash from unsuccessful applicants.
A recent survey from Allica Bank claims that 63% of commercial finance brokers have seen a reduction in the supply of business lending following the pandemic. Even more concerning is that 98% were concerned about business lenders; credit appetite and liquidity over coming years.
Allica Bank CEO Richard Davies said, “Established small and medium sized enterprises (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 nonbank lenders impacted by the pandemic, we intend to create the leading SME challenger bank for the decade ahead.”
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