The Government-backed business bank has launched its first phase of funding, worth £300 billion, to help small and medium sized enterprises (SMEs) access finance.
It is the first tranche of £1 billion worth of new capital allocated to the bank, which is specifically designed to help SMEs. The £300 billion commitment will be matched by at least the same amount from private sector investment.
Launching the funding, 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.”
“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.”
Government is keen to promote greater diversity and competition in the range of finance options available to SMEs by encouraging new lenders onto the market.
Although the bank will not be fully operational until next year, proposals are being welcomed from a wide variety of investors such as peer-to-peer lenders.