Small businesses struggling to access credit are to be given a welcome boost with £110 million of new funding, Vince Cable announced today. The Business Secretary pledged £55 million of Government funding – through a scheme called the Business Finance Partnership – to peer to peer lenders and other finance suppliers.
The first four successful bidders for the Business Finance Partnership funds are: Funding Circle, which will receive £20 million. It is a peer-to-peer lender enabling British people to lend money directly to small businesses in the UK and offers a faster and more efficient way for businesses to borrow finance. Zopa which will receive receive £10 million to offer in loans through peer-to-peer lending. Through its website investors can lend directly to small businesses, offering a more efficient way of helping firms to access loans. The two other winners of the bid are BOOST&Co, a fund management company and Credit Asset Management Limited, a subsidiary of City of London Group plc, which will receive £20 million and £5 million respectively.
“Small and medium sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market,” Vince Cable, Business Secretary said.
“Today’s funding announcement is just the type of help that the new Business Bank will offer. The bank, which will be operational by 2014, is being designed to tackle these long-standing, structural gaps in the supply of finance for SMEs,” he added.
The £100m fund is part of the government’s drive to diversify the sources of finance available to businesses in the UK. In total the Business Finance Partnership received £1.2bn in government funding.
