Lending to small businesses gets a £70m boost
The Department of Business, Innovation and Skills (BIS) has announced that it is helping to support the growth of UK SMEs, with £32m of finance set to be shared amongst three new lenders.
In a bid to offer SMEs some viable alternatives to traditional bank lending, the three lenders – MarketInvoice, URICA and Beechbrook Capital – will receive respective figures of £5m, 10m and £17m.
Brand new supply chain
URICA is set to use the funds to establish a new supply chain finance platform to enable the smooth running of cash from institutional investors to SME suppliers. In contrast, Mezzanine fund manager Beechbrook Capital argues that it will use the capital it has been awarded to create a new SME fund, focusing on growth capital.
Each lender has also committed to attracting more funding from investors in the private sector, which is set to bring the total fund available to SMEs up to more than £70m.
Business Secretary Vince Cable said: “A lack of access to finance is still choking off too many small businesses, preventing them from growing, taking on new staff or investing in new equipment.”
The funding has arisen from the small business branch of the government’s Business Finance Partnership, which aims ‘to increase the supply of capital through non-bank lending channels’, and give businesses greater access to diverse sources of finance, with a total investment of £1.2bn.
Market dominance of the big four
The big four banks, Barclays, RBS, HSBC and Lloyds's, currently handle 85% of all business loans.
Seven successful bidders under the programme are set to offer £240m in lending to SMEs through a combination of government funding and private sector investment.
The latest round of investment from the BIS is the second allocation in funding, with the first allocation seeing £55m awarded to four lenders (Funding Circle, Zopa, BOOST&Co, and Credit Asset Management Ltd) in December 2012.
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