By Daniel Hunter
John Longworth, Director General of the British Chambers of Commerce, has said that the new business bank could help thousands of firms grow.
Vince Cable will today (Monday) announce a £1 billion government commitment toward the creation of a business bank. It will aim to attract private sector funding so that when fully operational, it could support up to £10 billion of new and additional business lending.
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.
“The government has taken a decisive step toward the creation of a British Business Bank by committing real money to get it off the ground," Longworth said in support of the venture.
“We are pleased that ministers are heeding our call to create a business bank that goes well beyond a re-badging of existing schemes. The funding announced by Vince Cable is the first step in a journey toward a British Business Bank that enables new and growing companies to get access to capital in the same way that they do in Germany, South Korea, and the USA.
“Six in ten Chamber members told us just last week that they would feel more confident in securing finance if Britain had a government-backed business bank. So many companies will be encouraged by today’s news.
“However, there are a number of challenges that need to be addressed to ensure the business bank can support the real economy. At least initially, the business bank will have to work through existing lenders, which could put off some companies who still do not believe that the high-street banks will help them access the capital they need to grow.
"We also need to better understand how taxpayers' cash will be used to unlock additional funds for business lending from the markets. And given the fact that growing companies need access to capital for the long term, the funding announced today must be the first, not the last, sum destined to support business lending at this new institution.”
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