Challenger bank Atom has secured a £30m Tier Two capital facility to fund its UK growth plans, in an agreement with British Business Bank Investments Ltd (BBBIL), the commercial branch of the British Business Bank (BBB).
The £30m facility is being made through the BBBIL’s investment programme, which has committed £580m in total to providers of funding to small UK businesses and SMEs since it was launched alongside the BBB in 2014.
It is hoped Tier Two, or so-called “supplementary” capital, will enable Atom Bank – the first digital-only bank in the UK – to draw on funding more flexibly as it grows.
Commenting on the deal, CEO at BBBIL, Catherine Lewis La Torre, said: “Our investment in Atom bank demonstrates our commitment to increasing the diversity of small business finance by supporting recently licensed and ambitious challenger banks.”
Launched in 2016, Atom Bank immediately made a commitment to small business financing with one of its first products – a secure lending facility and fixed saver account for micro businesses and SMEs, at market-leading rates.
Founder and chairman at Atom Bank, Anthony Thomson, said that this Tier Two deal would give the challenger “tremendous flexibility”.
He added: “Like all banks, we are actively managing our capital structure and having access to Tier Two capital at this stage helps support our growth, and is a great result for Atom, its shareholders and customers.
“Tier Two capital at such an early stage of the growth cycle is rare, and we are extremely pleased to be gaining this support from BBBIL. Together with the BBB, we are sending a clear sign – we are here to support UK SMEs.”
Atom Bank serves both business and personal banking clients through a smartphone app, doing away with the traditional face-to-face banking models of high street lenders.
In an interview with Business Advice last year, Atom Bank CEO Mark Mullen said that as a startup itself, the challenger could relate to small business owners in a way the bigger banks no longer could.
“We know what it’s like to be a growing business,” said Mullen. “We know what cost management is, for example. We carry the badge of being a startup at heart, and that isn’t something we carry lightly.”
Commenting on BBBIL’s strategy behind the deal, Lewis La Torre went on to say: “We have seen challenger banks becoming an increasingly important source of UK SME funding and we believe a committed regulatory capital facility will not only support Atom’s growth trajectory but will also drive the bank’s ability to lend to UK SMEs.”
Read Business Advice’s exclusive interview with Atom Bank CEO Mark Mullen, here.
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