BBB’s Michael Strevens: Non-bank lenders play “crucial” role in SME finance

Alternative Credit Investor (ACI): What does your role encompass at the British Business Bank?

Michael Strevens (MS): My team, structured financial institution solutions, enters into asset-backed finance (ABF), credit risk transfer (CRT) and securitisation transactions that help lenders increase their ability to finance smaller businesses. We do this either by reducing their funding and capital costs or by increasing their lending capacity. We work with both bank and non-bank lenders, aiming to build lasting partnerships with those committed to smaller business finance. Relevant to this conference, we also play an important role in supporting smaller housebuilders and developers seeking to improve the UK’s housing stock.

ACI: You joined the Bank shortly after its inception. How has the Bank’s role in supporting businesses changed over the years?

MS: It’s been a privilege to be part of the Bank’s journey from the very beginning. Even before the Bank was officially created, when I was at the European Investment Fund (EIF), I worked closely with the team setting it up and exploring how we could contribute. In many ways, the Bank’s model remains the same: we work primarily through delivery partners, enabling them to lend more — and more diversely — to UK smaller businesses.

However, the changes that have taken place have been more subtle. The Covid-19 loan schemes significantly raised the Bank’s profile, not only among smaller businesses but also with institutional funders.

On the non-bank side in particular, funders had to consider how to integrate government guarantee schemes to support their clients — and many have continued with those practices since. The Covid-19 pandemic also gave the Bank a real opportunity to demonstrate what it could deliver, which built trust with policymakers and gave us the scope to make our programmes more flexible and responsive than before.

Internally, we’ve also streamlined our operations. Where we once had 20+ siloed products, we now group the bank into two broad businesses: banking and investments. Our colleagues in the investment business focus on fund investments and direct equity investments, while the banking business covers more typical banking products — from ABF (which includes our Community ENABLE Funding programme), CRT, and securitisation transactions to our Growth Guarantee Scheme, and Start Up Loans programmes.

This structure means we can offer a more strategic, long-term, and holistic service to our lending partners and, ultimately, to smaller businesses.

ACI: What is your view of the current funding climate for UK smaller businesses?

MS: It really depends on the type of business. The UK has a vibrant start-up ecosystem, which is clearly positive for early-stage firms. At the same time, other sectors face very specific challenges. Smaller housebuilders, for example, have had a tough period in recent years, with rising labour and supply costs. The encouraging aspect is that many of them have worked through these challenges, demonstrating real resilience. That resilience is something investors and lenders should take confidence in when looking at the sector.

ACI: How important are non-bank lenders in providing structured finance solutions for smaller firms?

MS: They’re absolutely crucial. Diversity is key in so many contexts, and SME lending is no exception. The more types of lenders we have, the more resilient the system becomes when one market or channel tightens.

ACI: Do you expect non-bank lenders to play a smaller or greater role in small business finance in the coming years?

MS: I expect their role to grow. As they continue to demonstrate their ability to lend responsibly and effectively, their funders will hopefully gain confidence as a result. That should translate into both more capital and cheaper capital for them to on-lend to smaller businesses.

ACI: In an interview with Bloomberg last year, you said the Bank was exploring significant risk transfers (SRTs) to encourage commercial banks to increase SME lending. Have these plans developed?

MS: Yes, we’re looking to combine our guarantee with SRT investors, enabling banks to free up capital and expand their SME lending. We’re seeing interest on both the lender and investor side, and we’re in active discussions that we hope will lead to a completed deal before long.

ACI: What are the key challenges in the UK SME funding space today?

MS: The biggest challenge is aligning the right capital with the right risks. That’s at the heart of what we do — working with smaller business lenders and their funders to help bridge that gap.

ACI: Does the macro-economic climate present any challenges?

MS: I think most financiers are well prepared for foreseeable challenges — the ones that can be planned for. The real test comes from the unexpected shocks, and those are always the hardest to manage, and by definition, prepare for.

ACI: Looking ahead, how do you expect the Bank’s work – and the market – to change?

MS: I think we’ll play an even more prominent role in the non-bank financial institution space, taking newer and more innovative positions in deals.

ACI: And finally, what are you hoping to get out of DealCatalyst’s UK Mortgage Finance Conference later this month?

MS: At the simplest level, we want to progress more transactions. But I’m also particularly keen to raise awareness of the Environmental, Social and Governance (ESG) credentials of bridging finance — particularly light and heavy refurb. These projects rarely reduce Energy Performance Certificate (EPC) ratings and often improve them, which is often overlooked in ESG strategies. I’d like to connect with lenders who share that view and are eager to advance the agenda.

Alternative Credit Investor is a media partner to DealCatalyst’s UK Mortgage Finance Conference, which takes place on 29 September 2025 at the Landmark London. ACI’s editor-in-chief Suzie Neuwirth will be moderating the panel: Building Momentum or Hitting Walls? Navigating Risks, Reforms and Returns in the UK Housing Market at 1pm.