As part of the first phase of the government’s new business bank they plan to offer small businesses that are having trouble finding finance £300m in available cash.
The finance applications are now open to all small businesses in the UK that have an annual turnover that is less than £100m. As part of the autumn statement in 2012 the Government already placed £1b in the bank to use for this purchase. However, the beginning £300m investment will be matched by other private investors.
The BIS, or Department for Business, Innovation, and Skills stated that it is very important to make sure that all businesses get access to funding as soon as possible. It believes that the initial transactions between businesses and the government will take place over the autumn even though the business bank is not going to be formally founded until at least 2014.
Business Secretary, Vince Cable, stated that he has heard from many small and medium sized businesses that their number one problem is funding access to finance that they need in order to grow or invest in more business opportunities. Therefore, the government has created the business bank to help make sure that businesses have a choice of financing options that will actually help them.
In addition, he stated that the reason that they are making funding available earlier then initially announced is because they are very concerned with increasing diversity and competition within the business lending market.
The original business bank plan was announced back in September of 2012 and is not an actual bank, but instead is a system that will be used to consolidate existing and some new lending schemes such as debt funds, challenger banks, asset lending, poor lending, and supply chain finance.
The new £300m fund is being offered as a new arm of the BFP (Business Finance Partnership) program.