UK Business Secretary Vince Cable has recently announced a £60 million small business finance scheme aimed at helping SMEs who are unable to secure business funding. This scheme will target even the smallest micro companies who are aiming to grow further. With the banks making their lending requirements increasingly stringent, this scheme is aiming to reinvigorate parts of the small business funding environment.
This fund is expected to meet some of the demand for funding from small, micro and social enterprises who may find it difficult to access bank funding. Cable has also claimed that this investment from the government’s Regional Growth Fund (RGF) will aim to safeguard more than 8,000 jobs over the next six years in areas of the country which are struggling. It will also aim to help drive further investment in fragmented or disadvantaged areas of the nation.
The RGF will use intermediary organisations to distribute the funds as they are the ones with local knowledge of their communities and will know the businesses with the biggest growth potential. This will hopefully be an effective way to reach start ups and sole traders in parts of the country which are most in need.
Though critics have pointed out that £60m is a small sum given the number of businesses in the UK, this initiative is still to be welcomed as it will hopefully encourage greater investment in up and coming regions of the country. This type of finance will be critical to ensure the survival of many small and micro businesses, as well as expanding the community finance sector. Vince Cable is keen to promote the benefits of a healthy community finance sector; having a diverse supply of finance is an essential part of the government’s ongoing industrial and economic strategy.