Business secretary Vince Cable first announced details of a state-backed ‘business bank’ in September last year. Since then, business groups have been eager to see the initiative rolled out and put into action.
April marked the launch of the first phase of funding available through the business bank, with the Government pledging £300 million to boost lending to small and medium enterprises (SMEs). This is just the first tranche of £1 billion worth of capital set aside for lending via the bank, with hopes that Government funding will be matched on a like-for-like basis by private sector investment.
With the new business bank, the Government aims to boost the diversity of SME finance options by encouraging new lenders into the market. Although the bank will not be fully operational until next year, the Government is inviting proposals from a wide variety of investors and lenders such as debt funds, asset backed lenders, supply chain finance and peer-to-peer lending platforms.
Lenders hoping to get involved should apply and be able to demonstrate how the government could make commercial investments via their platform before 22 May.