The British Business Bank has committed an additional £40 million to Harwood Private Capital to increase the availability of flexible financing for smaller and lower-middle-market businesses across the United Kingdom.
The investment supports 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.
Harwood will use the capital to provide debt financing for privately held companies pursuing organic expansion, acquisitions, and shareholder transitions. The strategy gives business owners an alternative to conventional bank lending or a complete sale through an M&A transaction.
The commitment increases the British Business Bank’s total investment with Harwood to £75 million. The government-owned development bank previously committed £35 million to the manager’s inaugural HPC UK SME Fund in 2020.
Harwood specializes in flexible private-credit solutions for lower-middle-market companies. Its target borrowers include founder- and family-owned businesses that need additional growth capital but want to preserve ownership and strategic control.
The inaugural fund invested across digital technology, clean-energy supply chains, manufacturing, tourism, and other sectors. One portfolio example is Western Marinas, a Welsh marina operator that used Harwood financing to restore facilities in Wales and southwest England.
That investment supported local jobs and family-operated businesses while attracting visitors and economic activity to surrounding coastal communities. It demonstrates how private credit can finance physical assets and regional companies that may not fit the standardized requirements of traditional lenders.
The British Business Bank’s mandate is to improve access to capital for smaller companies and address financing gaps that can limit growth, productivity, and job creation. In its 2025-2026 financial year, the bank supported £9.4 billion of financing for approximately 38,000 businesses.
That total included £1.3 billion of public funding, £4.3 billion of private capital attracted through the bank’s programs, and £3.7 billion of guaranteed lending. Around 30,000 recipients had not previously received support through the institution.
Harwood Private Capital UK Fund II is intended to extend this impact by supplying customized debt structures for companies whose requirements may not be served adequately by banks or private equity investors.
KEY QUOTES:
“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.”
Adam Kelly, Managing Director of Debt and Regional Funds at the British Business Bank
“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.”
Haseeb Aziz, Managing Partner at Harwood Private Capital
