Business Secretary Vince Cable has announced plans to create a
government-backed business bank, including new government funding
of £1 billion. It will aim to attract private sector funding
so that when fully operational, it could support up to £10
billion of new and additional business lending.
Alongside the private sector, the bank aims to get the market
lending to manufacturers, exporters and growth companies in
desperate need of support. According to a government statement,
the bank will operate at arms-length from government and will be
“professionally run and commercially focused”. It
will facilitate the provision of loans, including long-term
capital, to UK firms through banks and other financial
institutions.
Although the announcement was welcomed by the Forum of Private
Business, it warned that the new fund will have to overcome the
same barriers as high street lenders, which must also improve
their service if the ongoing credit crisis is to be solved.
“There’s no doubt action is needed-the banks aren’t lending
enough and we know this,” said the Forum’s senior policy
adviser, Phil McCabe. “But we really need a dual focus.
That is, getting more transparency in high street bank lending
and improving ethics in the way banks treat their small business
customers, backed by more lending through alternative sources of
finance, such as peer-to-peer platforms.”
The news comes as research into attitudes to funding resources
reveals that small and midsize businesses are heading back to the
days of money under mattresses and loans from family and friends,
rather than putting trust into their bank manager to look after
their finances.
Hitachi Capital Invoice Finance surveyed 1,000 UK small and
midsized firms and found that only 21 percent would trust advice
from their bank manager, compared with the majority seeking help
from their accountant (43 percent).
Share