It is the first slice of £1bn of new capital, with ministers expecting initial transactions to take place by the autumn, although small and medium-sized enterprises (SMEs) that require loans were urged to submit an expression of interest by 22 May.
Business Secretary Vince Cable said that the bank has been set up because small and medium-sized businesses are saying that access to finance is their number one problem, preventing them from investing and growing.
He is confident that the business bank will allow a range of measures that will provide small firms with the power to choose the type of finance that suits them and added that the bank is a long-term project but with an emphasis as releasing cash as soon as possible.
The bank will also be funded by around the same amount of capital from private sector investors in a bid to reduce SME’s reliance on the high street banks.
Alternative providers of finance such as the small ‘challenger’ banks and online portals that match retail investors’ funds with small firms needing funds, are being urged to apply to distribute the Government’s capital.
However, critics, such as the British Chambers of Commerce (BCC) say that while they welcome the bank, the Government must “think bigger” if it is to be a game-changer for small business and must provide more seed money than the £1bn being put forward.
While the Confederation of British Industry (CBI) said the business bank will help SMEs to grow, but only if they are aware of the initiatives available to them.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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