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Finally a bit of help from the Banks for the Small Businesses!

The Government are lending out £300m to give small companies a bit of a well needed boost.  Vince Cable has launched the first stages of the Business Bank and this will ease restrictions on the credit hungry SME’s

The money will be matched by nearly the same amount from backers of the Private Sector according to The Business Secretary. This is to steer away small and medium businesses from the large banks on the high street.

The government hopes this will cause a good range of lenders to spread funds from challenger banks which are smaller, to independent lenders with assets and online platforms that can match the cash of retail investors with small companies that are chomping at the bit for capital.

There are concerns with how quickly the money can be loaned out as the first loans will not be deployed until autumn at least.  The lenders will still possibly be applying to distribute the funds as late as February 2014.

SME’s have made it well known that their biggest problem is access to finance. They cannot invest or grow.

Vince Cable has said that the £300million boost will show how serious they are about growing competition and pushing diversity in the lending marketing for businesses. The aim is to build a robust bank institution for businesses for the long term.  Actually getting the money to the businesses is step one.

£1bn of capital has been allotted to the Business Bank, this £300million is the first amount to be allocated.  Business groups across the board were very welcoming of this move.

The Head of Policy at the forum of Private Business, Alex Jackman and the Director of Policy at the British Chamber of Commerce, Adam Marshall agree with Vince Cable.

Many people agree including the BCC cannot believe that it is taking so long for the State Bank to be set up.

The National Institute of Economic and Social Research have been contracted to research the effect of the bank lending contraction.  It found that small companies have been harder hit when trying to access finances.

The Business Bank won’t lend to small businesses directly but will push existing finance plans and give fair advice on suitable solutions or other lenders.  It will also provide finance wholesale.


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