Cable launches business bank with £300m fund

BUSINESS Secretary Vince Cable has unveiled the government’s business bank with £300m designed to boost lending to small and medium-sized businesses.

The money is being invested alongside private investors to address long-standing gaps in the finance market. It is the first deployment from the £1bn of new capital allocated to the business bank in the 2012 Autumn Statement.

The focus is on promoting greater diversity of debt finance available to SMEs by encouraging the growth of smaller lenders and new entrants in the market. Investments will be made via new and existing lending channels on a commercial basis.

Mr Cable said: “SMEs (small and medium-sized enterprises) are still telling me that access to finance is their number one problem, preventing them from investing and growing. That’s why through the business bank we are developing a range of measures to provide businesses with the power to choose the type of finance that suits them.”

He said the new pledge showed the sector it was 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,” he added. It is expected that the first transactions will take place this autumn.