Business secretary Vince Cable today announced the first phase of the government’s business bank, with a £300m fund for small and medium businesses struggling for finance.
The bank, which will consolidate £2.9bn from existing schemes, will have its funding matched by private sector peer-to-peer funding and is believed to be going fully operational by next year.
It is part of an allocated £1bn in new finance as ministers attempt to boost lending to small companies who feel they have been rejected by the country’s high street banks.
Mr 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.”
The announced was welcomed by the British Chambers of Commerce’s Director of Policy Dr Adam Marshall, who urged the government to ‘think big’ with the bank.
“Vince Cable is right to say that the creation of a fully-fledged business bank is a long-term project,” he said, adding that both vision and scale are required for the bank to be effective.
“To that end, we continue to urge ministers and the Bank of England to ‘think bigger’ when it comes to the bank’s investment capital, to ensure the bank can operate independently of Whitehall, and allow to it to work directly with dynamic new and growing companies as soon as possible, and for the long term,” he added.
The Confederation of British Industry (CBI) also welcomed the news.
Hayley Conboy, CBI Principal Policy Adviser for Enterprise, said: “This fund demonstrates the Government’s commitment to supporting the financing needs of smaller and medium-sized businesses, which will help them to grow.”
“It will broaden the funding options available to growing firms by boosting the alternative finance provider market. The key to the success of this and other Government finance schemes will be to raise business awareness of the initiatives available.”