Parliamentary Under Secretary of State for Small
Business, Consumers and Corporate Responsibility (): ENABLE Funding’
is a scheme administered by the British Business Bank which
provides senior funding (effectively at commercial terms) to
delivery partners and is designed to increase funding
diversification for leasing and asset finance providers and
peer-to-peer lenders, with the overall purpose of increasing the
supply of debt to underlying small and medium-sized enterprises.
Since the scheme began in 2014, senior secured funding has been
provided to various delivery partners and their receivable
portfolios have been ‘warehoused’ in a special purpose entity.
The aggregate sum of certain receivable portfolios reached a
desired critical mass whereby a capital markets refinancing (or
securitisation) can proceed, repaying the funding. The
transaction is expected to complete before the end of the
financial year 2019/20.
As part of the transaction, a credit enhancement in the form of a
capped second loss guarantee will be agreed. The guarantee issued
by the Department is capped at £66m and the ‘second loss’ element
means that the participating delivery partners will fund and
suffer an agreed amount up to the first loss threshold should
defaults in the portfolio occur.
The guarantee is not expected to last for more than seven years
and in practice will likely be much shorter. The beneficiary is
the securitisation vehicle (a newly incorporated entity) which
will purchase the facilities as part of the transaction. The
Department will receive a commercial fee in return for the
guarantee.
