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New Government backed bank to offer lending for small businesses

24th September 2012

So, today Business Secretary Vince Cable announced that he Government would allocate 1 Billion towards a new state-backed business bank aimed to give smaller businesses the resources it needs to be able to grow their business and survive in the absence of support from the country's main lenders currently. It is hoped that this backing will be matched by private capital and could support up to 10 Billion of lending resource.

"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," said Cable, at the Liberal Democrat party's conference in Brighton.

"Many new promising, growing companies simply can't get the loans they need to expand on reasonable terms. We are going to help fix this," he added.

Earlier this month Cable said that the Government's commitment to launching such a scheme would encourage lending competition amongst the traditional sources of small business loans. It is thought that the new bank could be operational within 12 to 18 months but haven;t we heard similar promises before?

You may remember the Bank of England's 80 Billion "Funding for lending" scheme which is now up and running. This was supposed to have the same benefit to SME's but appeared only attractive to people taking out mortgages for property rather than for business lending.

The British Chamber of Commerce business lobby group welcomed the news saying it would allow "new and growing companies to get access to capital in the same way that they do in Germany, South Korea, and the United States."

Cable has long pushed for the creation of a state-backed development bank along the lines of Germany's KfW or America's Exim Bank to expand commercial lending, but has had to tread carefully to avoid falling foul of European Union rules on state aid.

Alternatives already exist in the UK so rather than waiting 18 months for the new Business Bank to emerge, why not consider a Merchant Cash Advance from Salamander Finance. The application is simple and can lend up to 250,000 with an unsecured advance based on your average monthly credit card receipts. For more information, call our team now on 0161 480 5123.