New funding worth £80 million has been allocated to support businesses in the Midlands and North of England.
British Business Bank has handed £40 million to the Evolution Fund which is run by Birmingham-based investor Frontier Development Capital.
This fund is backed by a further £40 million commitment from West Midlands Pension Fund.
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The Evolution fund will provide flexible debt products of between £1 million and £8 million to established smaller companies in any sector with proven business performance, growth potential and a strong management team.
The funding can be used to support transactions, such as buyouts, shareholder reorganisations and debt refinancing, provide growth capital and help firms with their net zero commitments.
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Adam Kelly, managing director of the British Business Bank, said: "We are pleased to continue our support for Frontier, having previously backed its debt fund in 2020.
"The British Business Bank is committed to increasing the supply and diversity of finance for smaller businesses."
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Graham Mold, head of growth capital at Frontier Development Capital, added: "Despite the variety of debt providers in the market, it is still difficult for smaller firms to secure capital as many funders are unwilling to lend sums of under £10 million or to support transactions involving SMEs.
"The Evolution Fund reinforces our commitment to regional businesses often underserved by traditional lenders. As no two deals are the same, it is also designed to meet the need for tailored SME funding."
Shiventa Sivanesan, assistant director of investment management at the West Midlands Pension Fund, said: "We're excited to build on our existing partnership with Frontier and British Business Bank as part of our long-term commitment to support regional SMEs.
"Our investment is expected to deliver competitive returns aligned with our responsible investment values, allowing us to serve the interests of our members.
"Businesses are operating in an uncertain and challenging environment and by improving their access to funding we can enable them to grow and fulfil their potential.
"We hope other investors will follow our lead and help to scale up the support SMEs need to grow and thrive."