Business start-ups have become key driving forces behind the growth of the UK economy, with the latest Entrepreneurs Index revealing that more than 90,000 new businesses were established during the first half of 2013.
Business Secretary Vince Cable
However, while entrepreneurial activity continues to grow, business failures remain relatively high for a boom period – a factor which many commentators put down to the reluctance of high street banks to lend in earnest following the financial crash in 2008.
In order to help small businesses gain access to affordable finance, the government set up an initiative called the Business Bank last year which saw a number of Government lending schemes encompassed under one umbrella to simplify the process for SMEs. An additional £1 billion of funding was later pledged by Chancellor George Osborne in response to criticisms that the Bank was under-funded and not providing a viable alternative to high street lenders.
Now, the government has announced an additional programme of investments designed to strengthen the Business Bank, the full details of which are expected to be announced as part of the small business aides contained within the Chancellor’s Autumn Statement tomorrow.
Two aspects which have been confirmed, however, are a £250 million funding boost and the relocation of the Business Bank’s headquarters to Sheffield.
The government believes that the additional funding being channelled into the initiative highlights its commitment to providing growth capital for small businesses. Furthermore, by relocating the headquarters to Yorkshire, the government underscores its determination to ensure regional development in all areas of the country rather than simply focusing on the capital.
Business Secretary Vince Cable, unveiling the plans for the Business Bank at an event in London, called the initiative “a new long term institution which is helping to create more competition in the banking sector and give access to finance to businesses who are currently struggling with high street banks.”
He added; “Since I announced this initiative more than 10,000 businesses have already been helped, and this new money will help it do more of that.
“The British Business Bank is fixing a big long term problem in our banking system and it is set to unlock up to £10 billion of finance over the next five years to help small and medium sized businesses grow.”
However, the Business Secretary remains adamant that, despite the relocation of the headquarters, the Business Bank will not begin to operate at a high street level. Many business groups have called upon the government to make the service more accessible to SMEs by gaining a physical presence on the high street, but Mr Cable believes this would be contrary to the initiative’s ideals.
He concluded; “You are not going to see branches popping up with the Business Bank logo next to branches of Metro.
“This is a catalyst for lending, not a high street competitor.”
Do you think SMEs would appreciate the presence of the Business Bank on the high street, or should all Business Bank funding go towards lending rather than commercial property running costs?
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