The Mayor of London and the British Business Bank have launched a £70m fund to support growing businesses struggling to secure finance from conventional lenders. The Future London Growth Fund, managed by investment firm FSE Group, will provide loans ranging from £1m to £3m to companies across London's 32 boroughs and the City.
Filling the Funding Gap
Launched on Thursday, the fund aims to bridge the gap between traditional bank lending and larger venture debt arrangements, focusing on businesses with strong growth potential that may not yet have turned a profit. It has secured cornerstone commitments from the British Business Bank, contributing £20m, alongside Funding London, the Mayor's investment arm.
The launch comes as British businesses face increasing pressure over access to capital, with founders warning that funding shortfalls are forcing promising firms to expand abroad instead, as reported by City AM. Despite London's status as a global financial powerhouse, smaller enterprises continue to struggle to obtain growth funding.
Profitability Concerns
Research conducted by the British Business Bank revealed that only 71 per cent of London's business owners reported turning a profit, compared with 84 per cent nationally.
"London is the best city in the world to start and grow a business, but too often many are overlooked by traditional finance providers," said Sadiq Khan. "The Future London Growth Fund directly targets that funding gap and will provide a huge boost to businesses looking to scale up."
London's Funding Gap
The initiative arrives ahead of the Autumn Budget, with business leaders pressing for stronger investment incentives and better access to finance. Earlier this year, major UK pension providers pledged to explore a £1bn-plus Scale-Up Fund designed to direct more domestic capital towards fast-growing British science and technology firms.
Nevertheless, concerns persist that traditional lenders are falling short when it comes to supporting businesses caught in the gap between early-stage funding and larger institutional investment. Kala Desai, head of the new fund, warned that London's thriving startup ecosystem was concealing deep-rooted obstacles to growth.
"London is home to an exceptional community of high-growth, innovative businesses, yet many still hit a barrier when accessing scale-up capital," she said. FSE, which oversees nearly £460m in funds, has previously backed more than 1,000 growing businesses across sectors including technology, clean energy and advanced manufacturing.
