The British Business Bank has agreed to use its ENABLE Guarantee programme to support a senior facility of up to £100m provided by Paragon Bank to LE Capital.
For the first time, the British Business Bank has provided a pricing incentive on the guarantee to encourage the funding of electric and hybrid vehicles into the portfolio.
The guarantee has allowed Paragon Bank to continue its support to LE Capital by significantly increasing the quantum of financing.
The facility will support a portfolio of over £100m of financing to independent, smaller business, used car dealerships to help fund their stock.
The size of the facility will enable LE Capital to double the number of dealerships it serves across the UK, support larger facilities to independent and franchise dealers and offer more competitive pricing to both existing and new customers.
This is the first time the guarantee has been used in a specialty finance structure.
It is also the first ENABLE Guarantee transaction that the British Business Bank has supported Paragon with, which increases the amount of funding Paragon can provide to smaller business lenders.
Michael Strevens, head of structured FI solutions at British Business Bank, said: “This has been a transaction of firsts on multiple fronts.
“This is the first time we have used pricing to promote electric and hybrid vehicles, the first time we have used the guarantee for specialty finance, and the first time we have worked with LE Capital.
“We look forward to seeing this finance help independent car dealerships expand and grow, whilst also encouraging their transition to net zero.
“We are also delighted that our guarantees are now proven to support specialty finance providers, such as Paragon, provide significantly larger funding lines.
“These larger funding lines will provide a consistent and stable foundation to accelerate their smaller business lending clients’ growth.”
George Stancliffe, CEO of LE Capital, said: “Independent dealerships in the UK often rely on stock funding to grow revenues and expand operations.
“This new facility, supported by the British Business Bank, will allow us to double our funding capacity in the UK, offering larger facilities to independent and franchised dealerships, while providing more competitive pricing to our existing and future customers.
“We are excited to continue our journey with Paragon Bank and the support of the British Business Bank’s ENABLE Guarantee programme marks an important step into a new phase of growth.”
Jamie Pickering, Paragon Bank structured lending managing director, said: “This is Paragon Bank’s largest structured lending facility to date and showcases our desire to support [small and medium enterprise (SME)] lenders to expand their capacity.
“The ENABLE programme gave us the ability to enhance our support for LE Capital, helping the company to double its funding capability into the used car dealership market and to also accelerate the adoption of electric and hybrid vehicles in the used market.”
