The government’s Business Bank will be up and running next month, ready to invest in the country’s SMEs. This is a move that many of the small business sector’s leading lights have been looking forward to, in the hopes that it will help to stimulate growth by providing funding to small businesses. Borrowing has become more and more difficult to achieve for many SMEs, and though alternative finance is a great option, the weight of lending required needs some government input – and that’s what the Business Bank will offer.
The Business Bank will help the government to boost lending in the sectors that the banks have been neglecting. The Business Bank has been in the pipeline for months, and Vince Cable’s decision to push it forwards has been welcomed by SMEs across the board. The Bank will have nearly £4 billion at its disposal, meaning it will have some real firepower behind it to solve some of the problems encountered by SMEs.
The UK is the only G8 country without such an institution, so hopefully the Business Bank will go some way to plugging the gap in lending that has grown over the past few years. It also confirms that the future of business lending in the UK will be more diverse, which can only be a good thing. Hopefully it will go hand in hand with further expansions of services such as invoice finance, which have become more and more popular, making the business lending environment in the UK one that’s friendly to SME interests.
There will also be £300 million distributed to small businesses via the alternative lending sector, which will give the industry chance to grow and establish itself with new business customers. This could go a long way to kickstarting the faltering economy. This shows the government is keen to look past the obvious solutions to boost the buzzing alternative finance industry which is so valuable to helping small business interests.
Alongside this boost to alternative finance, the Business Bank will boost lending to small businesses – will this be the solution to some of the UK’s economic problems? Like many government schemes, we’ll have to wait and see whether it’s a success.