Banks pledge £1.5bn for SME growth fund
MAJOR banks have pledged to set up a new £1.5bn growth fund as part of plans to help finance SMEs.
The fund will be targeted at firms with a turnover between £10m and £100m that are looking for funding between £2m and £10m.
Funding would be in the form of equity capital with the minimum stake being 10% and the average investment expected to be five years.
The proposal is one of 17 contained in a new report by the Business Finance Taskforce set up by the chief executives of the UK banks earlier this year.
Taskforce chairman John Varley, chief executive of Barclays, said: “As banks we have an obligation to help the UK economy return to growth. The private sector will play a key role in the recovery and it’s our job to help viable firms to be successful.
“SMEs are particularly important as a source of job creation and growth. We look forward to working with the authorities and with business groups to take these initiatives forward.”
Business organisations have repeatedly claimed that banks have been too cautious in their lending in the aftermath of the credit crunch.
Other proposals in the report include a new lending code for small businesses, an appeals process for firms refused loans, raising awareness of other sources of finance.
The banks also want to create a ‘business finance round table’ where business groups and bankers regularly meet to identify problems and conduct a regular survey to establish the real picture on lending.
Matthew Fell, CBI director of competitive markets, said: “These proposals will make a positive contribution to the financing of British business, which is essential for economic recovery. The measures represent a welcome step forward from the polarised and unproductive debate about lending to business.
“The establishment of a Business Growth Fund will make a helpful contribution to the financing of small companies. It is the sort of scheme that we have been calling for.
“The independent quarterly survey will not only help to monitor the success of these measures, but also provide policy makers, banks and business with useful intelligence to help inform their decision-making.”
