The British Business Bank has agreed a guarantee of up to £500m with Oxbury Bank to increase the supply of long-term finance available to small and medium-sized agricultural businesses across Britain.
The transaction has been completed through the British Business Bank’s ENABLE Guarantees programme and will support lending intended for investment, productivity improvements, and longer-term growth across farming and the rural economy.
It retains a sustainability element used in the existing relationship between the two organisations. Oxbury can receive a pricing discount for lending that meets specified sustainability metrics, including activity linked to lower carbon emissions or renewable energy.
The structure brings private institutional capital into the facility. The British Business Bank will guarantee the senior position, while Davidson Kempner Capital Management will provide the junior investment. Oxbury will retain part of the credit risk on the underlying lending.
The British Business Bank said the scale and structure make the transaction its largest single-facility exposure to date.
Michael Strevens, managing director for Structured Financial Institution Solutions at the British Business Bank, said the deal would help “generate long term growth for the UK economy” by widening the capital available for smaller-business lending.
The £500m facility extends an existing financing relationship. An earlier ENABLE Guarantee with Oxbury was announced at £100m in November 2023 before being increased to £300m through subsequent extensions in 2024 and 2025.
That earlier arrangement has helped facilitate more than £425m of finance to over 400 small and medium-sized farming businesses, according to the British Business Bank. Since 2022, the development bank has also invested £35m in Oxbury through Tier 2 capital facilities.
The latest transaction comes at a point when agricultural businesses face unusually long investment cycles. Machinery, buildings, renewable-energy systems, water infrastructure, land improvements, storage, and changes to farming methods can require substantial upfront spending, while the financial benefits may emerge over several seasons.
Agriculture can also sit awkwardly within conventional SME credit models. Income is affected by commodity prices, weather, harvest timing, input costs, land values, and policy, while individual businesses can hold significant assets but experience highly seasonal cash flow.
Specialist lenders argue that those characteristics require underwriting based on a deeper understanding of agricultural operations than a standardised small-business process may provide. Oxbury was established specifically to serve farming and food-production businesses and holds a full UK banking licence.
The guarantee structure is intended to increase the amount of lending the specialist bank can support without the British Business Bank directly lending to individual farms. Public backing instead reduces part of the credit exposure within a portfolio, allowing participating lenders to deploy more finance.
The addition of Davidson Kempner as junior investor also shows how public guarantees can be used alongside institutional capital rather than replacing it. The British Business Bank said this is only the second ENABLE Guarantee bank transaction to include a junior investor within the structure.
For agriculture, access to finance is increasingly connected with productivity and environmental investment. Precision agriculture, data-led crop management, more efficient machinery, renewable energy, and improved storage can reduce costs or increase output, but require businesses to fund equipment before savings are realised.
The sustainability-linked pricing element is designed to create a financial incentive around some of those investments. Its effect will depend on which loans meet the qualifying metrics and the scale of the associated discount.
Farm-level investment also influences the wider food supply chain. Production capacity, efficiency, energy use, and resilience feed into food manufacturers, wholesalers, and retailers, meaning constraints on agricultural finance can have effects beyond individual farm balance sheets.
The British Business Bank is wholly owned by the Government but operates through programmes delivered with private-sector lenders and investors. ENABLE is designed to encourage participating finance providers to increase lending to smaller businesses by sharing portfolio risk.
The agreement does not mean £500m will be lent immediately, nor does it remove the requirement for agricultural businesses to meet Oxbury’s lending criteria. It creates capacity for a portfolio of eligible finance up to the agreed level.
With more than £425m already facilitated through the earlier guarantee, the new facility substantially increases the potential scale of the relationship. Its economic effect will depend on how much additional capital reaches farming businesses and how that investment affects productivity, resilience, and growth across the rural economy.
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