British Business Bank Puts Another £40 Million Behind Harwood

By Grace Kim

The British Business Bank has committed an additional £40 million to Harwood Private Capital, backing the first closing of Harwood Private Capital UK Fund II. Commitments to the fund and its related co-investment vehicles now total approximately £120 million.

The deal raises the government-owned development bank's total investment with Harwood to £75 million. It previously committed £35 million in 2020 to the manager's inaugural HPC UK SME Fund.

What will the money actually fund?

Harwood will deploy the capital as debt financing for privately held UK companies pursuing organic expansion, acquisitions, and shareholder transitions. The strategy targets founder- and family-owned businesses in the lower-middle market that need growth capital but want to keep ownership and strategic control — an alternative to conventional bank lending or a full sale through M&A.

The first fund spread its bets across digital technology, clean-energy supply chains, manufacturing, tourism, and other sectors. One example: Western Marinas, a Welsh marina operator that used Harwood financing to restore facilities in Wales and southwest England. That deal supported local jobs and family-run businesses while drawing visitors and economic activity to surrounding coastal communities.

It's a concrete case of private credit financing physical assets and regional companies that don't fit the standardized requirements of traditional lenders.

How big is the British Business Bank's wider footprint?

Very. In its 2025-2026 financial year, the bank supported £9.4 billion of financing for approximately 38,000 businesses. The breakdown:

• £1.3 billion of public funding
• £4.3 billion of private capital attracted through the bank's programs
• £3.7 billion of guaranteed lending

Around 30,000 of those recipients had never previously received support from the institution. The bank's mandate is to improve access to capital for smaller companies and close financing gaps that constrain growth, productivity, and job creation.

What are the two sides saying?

Adam Kelly, Managing Director of Debt and Regional Funds at the British Business Bank, framed the commitment as filling a persistent gap: "Many smaller businesses continue to face challenges accessing the flexible growth capital they need to scale, invest and realise their ambitions. Harwood has developed a strong track record of providing tailored financing solutions to UK SMEs, particularly those that have not been backed by private equity. Our commitment will help increase the availability of growth capital for businesses, support economic growth and create jobs throughout the UK."

Haseeb Aziz, Managing Partner at Harwood Private Capital, pointed to the durability of the relationship and the underserved borrower base. "The British Business Bank has backed Harwood Private Capital since our first fund, and this renewed commitment reflects the strength of that partnership. Founder and family-owned businesses are the backbone of the UK economy, yet many are still underserved by traditional lenders whilst wishing to maintain ownership control. The £120m of committed capital allows us to keep providing the flexible, partnership capital these businesses need to grow, make acquisitions and manage ownership transitions on their own terms."

Why does this matter for UK SMEs?

Fund II is designed to extend the bank's impact by supplying customized debt structures for companies whose needs banks and private equity investors don't adequately serve. With £120 million now committed and a state-backed repeat investor behind it, Harwood has the firepower to keep financing ownership transitions and acquisitions that would otherwise end in a forced sale.