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Business Bank: Will it live up to expectations?

In the aftermath of the autumn statement, many small businesses are starting to question whether the business bank, proposed by Osbourne and backed in the statement, will really help SMEs. While there has been an increased commitment from the government, there are concerns from some small businesses and experts that the Business Bank may still leave many small firms ineligible to apply for finance.

In the Autumn statement, Osbourne confirmed the creation of the £1 billion initiative in order to help small and medium enterprises get access to funds that might be beyond their reach from the big banks. However, previous schemes, such as Funding for Lending, have in fact not lived up to expectations – this particular example has benefited big business more than small in its first few months.

Xenios Thrasyvolou, founder of online freelancer marketplace PeoplePerHour, commented that any scheme that encourages lending to SMEs is to be welcomed, but believes the Business Banks won’t be the silver bullet. He commented: “The Chancellor skimmed over how firms will be able to access these funds, how long the application process will take, and crucially who will be eligible. The problem for small businesses has not been that lenders don’t have cash to lend, it’s that there are far too many hoops to jump through and red tape to cut even to get to the front of the line.”

“Unless this bank is really open for business, this is just another hollow promise, a headline initiative with very little hope of doing what the government has earmarked it to do.”

Only time will tell whether the Business Bank will live up to its good intentions or else just peter out and fail to bring the benefits it has promised. In the mean time, if your business is looking for finance, be sure to look into all your options, including alternative lending such as invoice finance.

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