First phase of business bank launched

The UK government have launched the phase of their business bank with an announcement that there will be an investment of £300m in the venture. This money is the first slice of a potential £1bn worth of new capital, with the main aim being to give small firms struggling to secure financing access to funds.

Ministers have already said they are expecting the first transactions to take place by autumn, although SMEs have been urged to submit their expressions of interest by the 22nd May. Vince Cable, the business secretary, has said that SMEs are still telling him that accessing much needed finance is still their main problem and this was stopping them from both investing and growing.

He went onto say that this was why, through the business bank, the government was developing a wide range of measures which would provide these businesses with the necessary power to choose which type of financing would suit them the best. He added that the first £30m boost would show how serious they were in increasing the diversity and competition in the business lending market.

It was last year that the government first announced that they would be committing £1bn of new capital to their business bank venture, saying that they wanted to encourage the growth of both small lenders and those who were new to the market. Although the bank will not be fully operational until 2014, the government have said that they want to make support available to SMEs before this.

Dr Adam Marshall is the British Chamber of Commerce’s director of policy, and he has said that they are welcoming the move by the government to increase the competition within the SME finance sector by offering the sum of £300m that, alongside the private sector, will be available to co-invest.