OakNorth, the specialist business bank, is to offer mortgages to small business owners and entrepreneurs for the first time.

It believes that SME business owners are under-served by traditional mortgage lenders because they cannot prove regular income. Instead, they are often asset rich with money locked up in their businesses or property.

OakNorth will lend from £500,000 and plans to differentiate itself by offering quick turnarounds on decisions and taking a holistic view of an entrepreneur’s finances. (In exceptional cases, it will lend from £250,000).

It plans to close £260m worth of mortgages by the end of 2019, carving out a 5-10pc share of the £4.3bn residential mortgage market by year-end.

One in 10 business owners in the UK are unable to access the finance they need to purchase their first home, says OakNorth.

The six largest UK banks dominate 77pc of the mortgage market but often find it unviable to create bespoke mortgages for SME business owners. Entrepreneurs who may be asset rich but regular income poor usually find it difficult to pass the high street banks’ lending criteria, as most banks only accept established and regular payments as “income”.

The challenger bank has taken on three veteran mortgage advisers: Kevin Appleton, a former mortgage broker who previously worked at Coutts & Co; Matthew McDonald, another mortgage broker who spent 11 years at Coutts; and Mark Howell from the Bank of Ireland, where he was director of marketing and customer engagement, UK mortgages.

OakNorth has disrupted the small and medium-sized business lending market. Launched in September 2015, OakNorth has lent £3 billion to British business within four years.

The lender does not disclose the number of businesses it has backed. However, it has lent anything between £500,000 to £40 million or more to businesses including coffee chain Notes, Z Hotels and Leon.

Ben Barbanel, head of debt finance at OakNorth, said: “High-street banks have limited mortgage offerings when it comes to borrowers who don’t have a regular or established source of income, such as the self-employed or business owners. Private banks, on the other hand, tend to have high entry requirements that are unfavourable to most of these individuals.

“By leveraging our experience in creating tailored loans for businesses, we can plug this gap and provide our growing portfolio of property investors and developers with mortgage solutions that are attractive, quick, convenient and easy to use.”