Business Bank First Phase
Today the Government’s new Business Bank launched its first phase with £300 million of investment for SMEs…
With small businesses still seeking access to finance the SME sector has received a boost from the first phase of the Government’s new business bank.
Alongside the private sector investment already made in the business bank, the government will be injecting £300 million.
£1 billion of capital has been earmarked for investment in the new business bank as set out in the chancellor’s 2012 Autumn Statement.
The Business Finance Partnership (BFP), announced only last month, has already been set up as a source of "alternative finance", using non-bank channels to supply capital to businesses.
BFP consists of seven lenders who have eached pledged to attract private sector finance to match the Government funds they have already been pooled.
It is hoped that the approach of the BFP will promote a greater diversity of finance availble to small and medium-sized businesses and to encourage new entrants to the lending market.
Speaking about the latest round of business bank funding, the Business Secretary Vince Cable said:
“Small and medium sized businesses are still telling me that access to finance is their number one problem, preventing them from investing and growing. That’s why through the business bank we are developing a range of measures to provide businesses with the power to choose the type of finance that suits them.”
“Today’s £300 million boost shows we are serious about increasing competition and diversity in the business lending market. Establishing a lasting business bank institution is a long-term project, but getting this money reaching SMEs as soon as possible is the first step.”
With £1 billion committed to the business bank, the government hopes to see £4 billion go to SMEs with the business bank out of its interim period and into fully fledged banking next year.
The investment programme is open until Febraury 2014 and the Forum of Private Business’ Head of Policy, Alex Jackman, added:
“There’s no doubt the money is desperately needed in the economy right now, so we urge the government to get the cash out to where it’s needed most, by working with organisations to ensure bids are successful. We certainly don’t want to be seeing any of this money sitting untouched come February next year.”
“So overall, while we welcome this news, the overriding message has to be that this money needs to be out the door fast, and not getting jammed in it.”
SMEs looking to tap into the funding are encouraged to visit and read Investment Programme to encourage lending to SMEs at the Gov.uk website.