The British Business Bank has committed a further £40 million to Harwood Private Capital to increase the supply of flexible growth capital to smaller businesses across the UK. The commitment, announced on 12 November 2026, supports the first close of Harwood Private Capital UK Fund II and takes the Bank's total commitment to Harwood to £75 million.

The investment brings total commitments across the new fund and its committed co-investment vehicles to approximately £120 million. The fund will back smaller and lower mid-market private companies, offering flexible debt as an alternative to traditional bank lending and to mergers and acquisitions transactions.

What the funding will support

Harwood Private Capital provides flexible debt solutions to founder, family and management-owned businesses. The capital is intended to help those companies pursue expansion, acquisitions and shareholder transitions without giving up ownership of the business.

The Bank said the commitment supports its objective of improving access to finance for smaller businesses throughout the UK, particularly where there are gaps in the market for growth and scale-up capital. The funding is aimed at companies that need finance to grow but may not fit the standard lending criteria of high street banks.

Harwood Private Capital is the private credit arm of the Harwood Capital Management group, which manages more than £1.4 billion across public equities, private equity and private debt. The new commitment builds on the Bank's £35 million commitment to Harwood's inaugural fund, HPC UK SME Fund, in 2020.

Why smaller firms need growth capital

Small and medium-sized businesses employ around 17 million people in the UK, accounting for roughly 60% of private sector employment, yet many struggle to raise the finance they need to expand. Flexible debt, which can be structured around a company's cash flow rather than fixed repayment schedules, is designed to bridge that gap for firms with solid trading records but limited access to traditional lending.

The British Business Bank, the UK government's economic development bank, said that in 2025/26 it supported UK smaller businesses to access £9.4 billion of finance, benefiting 38,000 businesses. The Harwood commitment is part of that wider effort to channel capital into SME lending and growth finance.

Adam Kelly, managing director for debt and regional funds at the British Business Bank, said the Bank was pleased to continue its support for Harwood and to help ambitious smaller businesses across the UK secure the funding they need to grow.

What the first close means

A first close marks the point at which a fund has raised enough committed capital to begin investing, while continuing to raise further money from other investors. With approximately £120 million committed across the fund and its co-investment vehicles, Harwood can now start deploying capital to UK companies while it works towards a final close.

For the smaller businesses the fund targets, the practical effect is a new source of growth finance at a time when borrowing costs remain elevated following the Bank of England's decision to raise Bank Rate to 4% last week. Companies seeking funding will still need to meet Harwood's investment criteria, and the terms of any financing will depend on each business's circumstances.

Part of a wider push

The commitment comes as the government looks to the British Business Bank and the National Wealth Fund to support fast-growing firms, with further funding for both institutions announced in the Autumn Budget 2026. For Harwood, the Bank's backing adds a state-supported cornerstone investor to a fund aimed squarely at the lower mid-market, where the Bank says gaps in growth capital remain most acute.

Sources: British Business Bank; BusinessCloud