Small and medium-sized businesses (SMEs) are set to receive a £70 million lending boost as part of government action to increase the availability of finance.
Three new lenders – Market Invoice, URICA and Beechbrook Capital – will share more than £30 million of government funding to offer SMEs alternatives to traditional bank lending.
They have committed to attracting additional funding from private sector investors, with the total expected to boost the pool of credit available to SMEs from the three lenders by more than £70 million.
Business Secretary Vince Cable said on 22 March: “A lack of access to finance is still choking off too many small businesses, preventing them from growing, taking on new staff or investing in new equipment.
“We are taking a range of actions to support SMEs and shake up business finance markets, including through the new business bank.
“Today’s £30 million announcement is an important boost for non-traditional lenders with creative and innovative solutions. It will increase competition and create a more diverse and balanced market for business lending.”
The funding comes from the Business Finance Partnership (BFP), through which the government has committed to provide £100 million of funding for non-traditional lenders in order to diversify sources of finance available to SMEs.
Currently, 85 per cent of all business loans are handled by the big four banks. It will be interesting to see how this initiative, of Government Funding SMEs using alternatives to traditional bank lending, pans out.