What is the Business Bank?
23rd April 2013
There has been a lot of publicity recently about the Business Bank so here’s our quick guide to what all the fuss is about.
The Business Bank is a Government initiative designed to address long-standing gaps in the SME finance market. Don’t expect to find a branch opening on your High Street, however. The Business Bank is an umbrella body for £2.9bn of existing government schemes to improve access to finance for small and medium sized businesses.
The Business Bank won’t lend or invest directly. Instead, it will bring new sources of money into the market by encouraging new providers, creating more competition and better promoting business advice services.
New providers will include non-bank providers of debt, equity and working capital, including online peer-to-peer platforms and new lenders.
In addition, a new enterprise finance guarantee will encompass trade credit, give additional guarantees for lenders and be extended to businesses lacking track records and who are seeking to borrow less than £25,000.
Who is the Business Bank really trying to help?
The main aim is to help SMEs who are seeking funds to expand and develop new products and services. The Bank will also help smaller businesses, those that have been trading for less than five years and that lack collateral for loans. The scheme is not, however, designed to shore up failing businesses.
When will this happen?
The bank will not be fully operational until 2014, but the Government is proposing to make support available to SMEs in advance of this. The Government is calling for proposals from a range of lenders and other lending platforms and the first transactions are expected to take place by Autumn 2013.
With the banks still proving to be conservative in their lending, the range of choices in the market is already growing. If you would like to discuss the finance options for your business, be they traditional or alternative, please contact us.
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