Online lender gains £140m of funding to boost growth

AN ONLINE lender to small businesses has secured £140m of debt funding to accelerate its growth from Wall Street giant Citi and fund manager M&G Investments.

Capital on Tap was launched six years ago to provide finance to small companies underserved by the big high street lenders. The firm has secured £90m in debt funding from M&G and lender Triple Point, and a further £50m from Citi and private equity house Pollen Street Capital. It has raised more than £30m in equity and £200m of debt since launching in 2012.

Capital on Tap offers credit facilities of up to £50,000 to small firms. The firm will partly use the new finance to launch in other countries across Europe. It has provided more than £500m in funding to more than 40,000 businesses to date.

James Pearce, the head of direct lending at M&G, said: “This deal brings much needed cash flow to small businesses whilst benefiting our pension fund clients.”

Start-up digital lenders – including Tide and Starling – are increasingly launching business banking services in a market long dominated by the big banks. Regulators have carved an £833m fund out of state-controlled RBS to boost competition in business banking, with lenders invited to bid for chunks over the coming months.

RBS was forced to cough up the funding by competition authorities as the price of keeping business banking subsidiary Williams & Glyn.

Capital on Tap was founded by David Luck, now chief executive, and serial entrepreneurs George Karibian and Jan Farrarons.

Mr Luck said: “We continue to see small businesses being underserved by banks and offered really poor service; we are trying to solve that issue.”