Independent lender Henry Howard Finance has agreed a £51m asset finance facility under the British Business Bank's ENABLE Funding programme.
The facility, which is 50% guaranteed by the European Investment Fund, will allow Henry Howard to extend its asset finance funding to a larger portfolio of smaller UK businesses.
Henry Howard, backed by investor Cabot Square Capital and based in Newport, is the first South Wales-based lender to become a partner of the British Business Bank.
It has been providing finance to small businesses for over 20 years and last year it saw its lending grow to more than £70m from £40m. It aims to continue its expansion throughout 2016.
Business Secretary Sajid Javid said: "Every growing business needs to invest in the right tools to get the job done, whether that's upgraded laptops or new delivery trucks.
"This £51 million facility backed by the British Business Bank's ENABLE Funding programme and the EIF will allow small firms to get new equipment without taking a big hit to their cashflow.
"This means they can continue to grow, create jobs and benefit local communities across Wales and the rest of the UK."
Mark Crook, co-founder and COO at Henry Howard Finance, added: "Access to asset finance is a major barrier to growth for many small businesses. We hope the new facility will remove this barrier and allow more SMEs to grow and prosper."
Keith Morgan, British Business Bank CEO, commented: "This is the third transaction in our ENABLE Funding programme which has now provided a total of £202m to non-bank asset finance providers."
The ENABLE Funding programme is delivered by British Business Bank Financial Services, a subsidiary of British Business Bank, on behalf of the Department for Business, Innovation and Skills.