The British Business Bank has accredited the first provider for asset finance lending under its Enterprise Finance Guarantee (EFG) programme.

Hitachi Capital UK will start in the new EFG scheme with the bank to extend funding to SMEs in the UK.

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The EFG scheme was developed by the bank in order to facilitate borrowing by SMEs who would otherwise be ineligible for a loan, due to an insufficient credit record.

EFG-accredited lenders like Hitachi enjoy a government guarantee on 75% of the debt for an outstanding facility, potentially allowing them to expand volumes. The ultimate decision process regarding a loan remains with the lender, and the guarantee does not constitute insurance for the borrower in case of a default.

Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance said: “Being the first funder to be part of the EFG scheme for asset finance is a great privilege and we are confident that it will enable us to unlock access to asset finance for British businesses and support their development and growth in the future … Our plan is to fulfil at least £25million of funding under this scheme over the next twelve months.”

Bernard Skivington, director of Wholesale Solutions at the British Business Bank, said: “This new variant is a major development of an established core product for the Bank, enabling the provision of additional asset finance, a vital funding option for smaller businesses looking to grow, expand, and create jobs. Having access to EFG to support critical investment in business assets through leasing or hire purchase provides a significant opportunity for many more viable smaller businesses to realise their ambitions.”

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Simon Goldie, head of asset finance at the Finance and Leasing Association (FLA), said: “The FLA warmly welcomes the British Business Bank’s announcement … Having worked very closely with the bank to help develop this facility, we look forward to seeing the availability of much-needed SME funding boosted in this way.”

The EFG programme was started in 2009, and as of June it had provided £2.9bn across 28,000 loans. The British Business Bank originally planned to launch the asset finance variant in summer 2016, but it pushed the launch back in order to find a viable partner.

Hitachi Capital is the first lender to be accredited since 2013. It has also been working in a similar British Business Bank initiative called ENABLE Funding.