First phase of £1bn Business Bank funding deployed to SMEs
11th April 2013 | News
The initial phase of the government’s new Business Bank is set to be deployed to UK SMEs, with £300 million invested alongside additional private investors as the coalition seeks to promote greater diversity of debt finance available to small firms.
By encouraging the growth of smaller lenders and new entrants to the marketplace, SMEs will have more access to finance than before.
A recent study by the National Institute of Economic and Social Research (NIESR) suggested that SMEs have been disproportionately affected in their chances of securing finance due to the contraction in bank lending since 2008.
Subsequently, the government committed to £1bn of new capital funding via its Business Bank initiative as detailed in the 2012 Autumn Statement.
Business secretary, Vince Cable, said: "SMEs 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."
The first transactions to small firms are expected to be carried out over the coming months, but the role of bigger firms in the growth of SMEs has also been highlighted by Ben Dowd, business director at O2.
"Small businesses form the engine room of the economy. Support to encourage investment in this community is crucial and the business bank is a great first step in government and private sector coming together to do this. But more can still be done," he said.
"It’s not just about funding. Big businesses also have an important role by offering advice, mentoring and support to help Britain’s entrepreneurs turn their ideas to reality and help get Britain’s economy back on the road to growth."