£300m boost for small businesses
The money will be the first slice of £1 billion of new capital, with the aim of boosting smaller firms (SMEs) struggling to access finance.%VIRTUAL-SkimlinksPromo%
Ministers said they expected the first transactions will take place by the autumn, although applicants were urged to submit an expression of interest by May 22.
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."
The Government committed £1 billion of new capital to the Business Bank last year, saying it wanted to encourage the growth of smaller lenders and new entrants to the market. The bank will not be operational until next year, but the Government said it wanted to make support available to small and medium sized businesses as soon as possible in advance of this.
Dr Adam Marshall, director of policy at the British Chambers of Commerce, said: "We welcome the Government's move to increase competition in SME finance by offering £300 million to co-invest alongside the private sector. Vince Cable is right to say that the creation of a fully-fledged Business Bank is a long-term project.
"However, for the Business Bank to be a game-changer, it urgently requires both vision and scale. 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 it to work directly with dynamic new and growing companies as soon as possible, and for the long term."
Hayley Conboy of the Confederation of British Industry (CBI) 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."
TUC general secretary Frances O'Grady said: "It's great to see that more money is being made available to businesses through the British business bank. However, today's announcement shouldn't be seen as a silver bullet for curing all our economic ills."