The chancellor has confirmed that the government will put £1bn into a new Business Bank aimed at boosting lending to small companies.
With the bank itself already announced by business secretary Vince Cable, George Osborne said: “We’re creating a new Business Bank and providing it with £1bn of extra capital which will lever in private lending to help small and medium sized firms and bring together existing schemes.”
The government will co-invest at least £300m over the next two years, alongside private investors, in channels that are expected to help diversify the sources of ﬁnance available to small businesses.
Up to £50m will be deployed next year, peaking at £300m in 2015/16, and then a final instalment of £150m in 2017/18. The bank iwill bring together, review and rationalise existing government schemes aimed at supporting access to ﬁnance for businesses under a single organisation.
It will deploy £1bn of additional capital and enable UK Export Finance (UKEF) to provide up to £1.5bn in loans to ﬁnance small ﬁrms’ exports.
Responding to the news, Paul Aitken, CEO of personal asset lender borro, said: “This is certainly a positive step however, we have already seen various initiatives in play, to little effect. If we are going to encourage small and medium sized businesses to grow, the fovernment needs to pull out all the stops.”