British Business Bank boosts Oxbury Tier 2 funding

The British Business Bank has increased its Tier 2 capital funding for Oxbury to GBP £35 million, adding GBP £10 million to a facility first arranged in 2022.

The additional funding strengthens the capital position of the specialist agricultural lender, which focuses on the UK food and farming sector. The support comes as Oxbury marks five years since it began lending to farm businesses.

The original facility totalled GBP £25 million. With the new commitment, total Tier 2 backing from the state-owned development bank now stands at GBP £35 million.

Oxbury lends to smaller businesses across the food and farming sectors, including land purchases, infrastructure, automation, storage, and working capital. The investment is intended to support the availability of finance for small and medium-sized businesses across the rural economy.

Since the first facility was agreed, Oxbury has expanded its savings base to support its loan book and says it now accounts for one in five new farm loans in the UK on a rolling 12-month basis.

The bank also says it is approaching a 10% share of new agricultural lending nationally, placing it among a small group of specialist providers serving a market that larger mainstream lenders have often treated as a niche segment.

Rural focus

The British Business Bank has increased its activity in specialist forms of finance for smaller UK businesses, including through bank partnerships and structured funding. It said this transaction reflects its commitment to the food, farming and agricultural economy.

Tier 2 capital is a form of subordinated funding that can support a bank’s regulatory capital base and allow it to extend more lending while meeting prudential requirements. For specialist lenders, such facilities can be an important source of support as they scale loan books in concentrated sectors.

Oxbury’s regulatory capital structure includes shareholder backing from investors with roots in food and farming, as well as institutional funding. The British Business Bank said its Tier 2 note investments are designed to act as a catalyst for recipient banks as they grow.

“We are delighted to increase our Tier 2 funding with Oxbury Bank and strengthen our relationship with them as a delivery partner. We have completed several transactions with Oxbury across our Banking business since 2022, which reflects the diversity of finance types we want to provide to the farming economy,” Richard Bowen, Managing Director, Direct Financial Institution Solutions, British Business Bank, said.

“We hope this transaction enables Oxbury to support as many food and farming businesses as possible, and we look forward to seeing the growth this facility will bring to the farmers who access it.”

Market share

For Oxbury, the deal adds to a period of expansion in a lending market shaped by volatile commodity prices, shifting farm incomes and investment needs tied to equipment, land use and storage. Access to specialist credit remains a recurring issue for smaller agricultural businesses, particularly where cash flow is seasonal, and asset values can fluctuate.

“We are extremely grateful to the British Business Bank for its continued support. They backed Oxbury in 2022, relatively soon after we began lending, and this additional facility reflects the progress made over the past five years,” Nick Evans, Co-Founder and Managing Director, Oxbury Bank, said.

“Oxbury was founded to provide specialist finance to the UK’s food and farming sector. Today we are executing one in five new farm loans in the country and are approaching a 10% share of new agricultural lending. That growth has been underpinned by disciplined underwriting, strong credit performance and a shareholder base comprised overwhelmingly of farmers and landowners.”

Evans added that support from both farmers and the government strengthens their platform for sustainable growth.