Business Bank: What the business world thinks
By Marcus Leach
Vince Cable has announced that the government is to put £1 billion into setting up a bank designed to increase the amount of lending to businesses.
Speaking at the Liberal Democrat conference the business secretary said that the additional funding will help many small and medium-sized companies (SMEs) who have struggled for credit since the financial crisis.
The Government will build a single institution that will address long-standing, structural gaps in the supply of finance, identified in Tim Breedon’s report on non-bank finance. It will bring together in one place Government finance support for small and mid-sized businesses.
"We need a new British Business Bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high-growth companies that power our economy," Mr Cable said.
"Today I can announce we will have one. I am working with the chancellor to develop a state-backed institution that will combine up to a billion pounds of new government capital with a larger private sector contribution.
"This will then apply further leverage through guarantees to support up to £10bn of finance to SMEs [small and medium enterprises] and mid-sized business - a significant portion of all the lending available."
The news of a 'British Business Bank' has been greeted with differing views in the business world, although the early general consensus is that it is positive news.
"By bringing together all existing support into a one-stop shop, and by increasing the supply of capital to firms that want to grow long-term, the business bank has the potential to support lending and help small and medium-sized businesses to grow," John Cridland, CBI Director-General, said.
"The bank could also play a vital role in packaging up and selling debt from medium-sized companies, allowing them to access vital finance streams.
"The Government must now work... continued on page two >