Will the New Business Bank help start-ups?

Lifebuoy, floating on waves, (c) frenta, FotoliaThe first phase of the government’s new business bank has been launched, providing a well needed lifeline for small and medium sized businesses struggling to access finance.

£300 million will be invested alongside private investors to address long-standing gaps in the SME finance market.

This money is the first deployment from the £1 billion of new capital allocated to the business bank in the 2012 Autumn Statement. It will build on the success of the Business Finance Partnership to leverage at least the same amount in private sector investment.

The programme aims to help diversify and expand the supply of lending to SMEs in a way that mobilises additional funding from private sector sources and channels the funds to businesses in an effective, appropriate and responsible manner.

New research by the National Institute of Economic and Social Research (NIESR) highlights that SMEs have been disproportionately affected in their ability to access finance as a result of the contraction in bank lending since 2008.

Business Secretary Vince Cable said:

Small and medium sized businesses are still telling me that access to finance is their number one problem, preventing them from investing and growing. That’s why through the business bank we are developing a range of measures to provide businesses with the power to choose the type of finance that suits them.

Today’s £300 million boost shows we are serious about increasing competition and diversity in the business lending market. Establishing a lasting business bank institution is a long-term project, but getting this money reaching SMEs as soon as possible is the first step.

Adam Riccoboni, co-founder of freelance talent marketplace MBA & Company, who recently secured £800,000 of funds from VCs, understands the difficulties that start-ups and small businesses face in trying to access finance.

“The arrival of the Business Bank cannot come soon enough. The hope is that this pot of cash will help vibrant though credit-starved startups and SMEs to access finance, oiling the wheels and kickstarting the economy.

“The Government has resorted to Plan B after less than glowing feedback for the Funding For Lending Scheme, which has benefited mortgage borrowers but has done very little for businesses needing credit. So there are high hopes for the Business Bank.

“While there is already the option of VCs and crowd funding, the more channels there are for entrepreneurs wanting to access credit, the better.”


Further information on the new investment programme can be obtained on the Gov Website at https://www.gov.uk/investment-programme-to-encourage-lending-to-smes

The application process is open until midday on 28 February 2014, however applicants are encouraged to submit an expression of interest before midday on 22 May 2013.

Roadshows to present the programme to prospective applicants are being scheduled.  For further details, email investmentprogramme.events@bis.gsi.gov.uk

Photography credit: “Lifebuoy on waters” by Frenta, Fotolia


I’m Mary Cummings, a ghostwriter, collaborator and all round word doctor. I help business owners write and publish business books; I'm also passionate about helping creative freelancers find work that they love - their work sweet spot with work on their terms, projects they love and clients who are a dream to work for.

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