SMEs served a bigger slice

New lenders unveiled under Government's Business Finance Partnership scheme with a potential £70m up for grabs

SMEs served a bigger slice

SMEs are being promised yet more financial assistance after three lenders were allocated £30m of Government funding from the small business tranche of the Business Finance Partnership (BFP).

Market Invoice, URICA and Beechbrook Capital have committed to attracting additional funding from private sector investors, with the total expected to boost the amount of credit available to SMEs from these three lenders by more than £70 million.

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.

“We are taking a range of actions to support SMEs and shake up business finance markets, including through the new business bank.

“Today’s £30 million announcement is an important boost for non-traditional lenders with creative and innovative solutions. It will increase competition and create a more diverse and balanced market for business lending.”

The BFP is part of a larger programme of credit easing measures announced in the Autumn Statement 2011 to support smaller and mid-sized businesses that do not have ready access to capital markets.

Through the BFP, the Government committed to provide £100 million of funding for non-traditional lenders in order to diversify the sources of finance available to SMEs and improve competition. Currently, 85% of all business loans are handled by the big four banks.

This is the second allocation of funding by BIS. The first allocation was made in December, when four lenders (Funding Circle, Zopa, BOOST&Co, and Credit Asset Management Ltd) were allocated £55 million. 

The seven successful bidders announced under this programme are expected to facilitate total lending of more than £240 million to SMEs by attracting private sector investment alongside government’s funding.

Meanwhile, SMEs struggling as a result of late payments from customers may have been thrown a lifeline by the Yorkshire Bank which is launching a £100m invoice finance fund.

The fund is available to new and existing Yorkshire customers and has been ring-fenced from the bank’s £1bn Business Expansion Fund introduced last year.

Here at Elite Business, we are naturally all for anything which gives SMEs a welcome boost in times of austerity but, as always, the proof will be very much be in the pudding.

Needless to say, we wait with baited breath to see how big a slice of the funding pie ends up with the people, businesses and purposes it is intended for. 

Adam Pescod
Adam Pescod

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