UK-based Allica Bank has secured £55m in additional funding to offer banking services to small and medium-sized businesses (SMEs).

The investment comprises £25m in equity funding from Allica Bank’s existing investors Atalaya Capital Management and Warwick Capital Partners.

The remaining £30m is in form of a Tier 2 capital facility from British Business Bank’s wholly-owned commercial subsidiary, British Business Investments.

Allica Bank said it will use the proceeds to accelerate its growth.

The fintech challenger bank’s latest funding builds on the £110m Series B funding round in November 2021.

The SME lender has so far raised £285m in funding, which will allow it to compete in the SME banking market. 

Last year, the bank’s SME lending is said to have grown to more than £560m and it hopes to complete £3bn of lending to SMEs in the next three years. 

The deposits also soared to more than £800m by the end of 2021, it said. 

Allica Bank CEO Richard Davies said: “The new facility from British Business Investments alongside further equity from our existing lead investors will enable Allica Bank to support and scale even more of Britain’s established SMEs and growth companies at a time when SMEs are looking for more tailored support from their bank.

“Allica is fast becoming the SME challenger bank of choice through combining our proprietary technology with experienced local relationship managers to provide great customer experience.”

In November 2021, media reports said that Allica Bank was in talks to buy the £1bn UK SME business loan book of Allied Irish Banks (AIB).