London-based Harwood Private Capital has received an additional £40m commitment from the British Business Bank to increase the supply of flexible growth capital to smaller businesses across the UK.
The investment supports the first close of Harwood Private Capital UK Fund II, bringing total commitments across the fund and its committed co-investment vehicles to approximately £120m.
The funding is offered as an alternative to traditional lenders and M&A transactions.
The fund and its co-investment vehicles will back smaller and lower mid-market private companies, helping them pursue expansion, acquisitions and shareholder transitions.
The new commitment takes the Bank’s total commitment to Harwood to £75m, building on its £35m commitment to Harwood’s inaugural fund, HPC UK SME Fund, in 2020.
The British Business Bank said the commitment supports its objective of improving access to finance for smaller businesses throughout the UK, particularly where there are gaps in the market for growth and scale-up capital.
Harwood is a private credit investment manager specialising in flexible debt solutions for UK lower mid-market businesses.
Its inaugural fund has supported businesses in sectors including digital technology, clean energy supply chains, manufacturing and tourism.
One example is Western Marinas, a Wales-based marina operator backed by the HPC UK SME Fund.
Harwood funded the restoration of marina facilities in Wales and South West England.
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The companies said the investment has helped secure local jobs and support family businesses in the region, while attracting visitors and boosting economic activity across surrounding coastal communities.
Adam Kelly, managing director, debt & regional funds, British Business Bank, said: “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.”
Haseeb Aziz, managing partner, Harwood Private Capital, said: “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.”
Harwood Private Capital is the private credit arm of the Harwood Capital Management group.
It backs founder, family and management-owned companies with EBITDA of £2-10m, providing financing for growth, acquisitions, management buyouts and shareholder transitions.
The group, which describes itself as a leading investor in UK companies, manages over £1.4bn across public equities, private equity and private debt and has invested in over 300 companies.
The British Business Bank is the UK government’s economic development bank, established in November 2014.
In 2025/26, it said it supported UK smaller businesses to access £9.4bn of finance, benefiting 38,000 UK businesses.