£500 million of Government investment for small and mid-sized businesses open for applications
The Government is today asking for applications to manage £500 million of its investment available through the Business Finance Partnership (BFP).
The BFP aims to ease the flow of credit to small and mid-sized businesses in the UK by diversifying their sources of finance and making them less reliant on bank lending. It is part of a £21 billion credit easing programme being taken forward by the Government to open up new channels of finance for businesses and use the UK's budget credibility to pass on the benefits of current low interest rates.
Today's announcement follows a highly successful first round of bidding, which attracted 24 proposals from managed funds. Budget 2012 confirmed a shortlist of seven funds to potentially receive investment through the BFP of up to £700m.
Up to £400 million more will be invested by the Treasury through managed funds that lend directly to mid-sized businesses. The Department for Business, Innovation and Skills will invest up to £100 million through non-traditional lending channels that lend directly to small businesses. It is expected that these channels could include mezzanine finance funds, supply chain finance schemes and peer-to-peer lenders.
The Chancellor said:
"These proposals are the next part of our credit easing programme, passing on the benefits of Britain's creditworthiness to businesses, and opening up new options of finance for them. They are only possible because of the credibility that Britain has earned - and the low interest rates that come with it - as a result of taking the tough decisions needed to deal with our debts."
Business Secretary Vince Cable said:
"As businesses are continuing to struggle to get credit from their banks, developing alternative lending channels so firms are less reliant on banks is essential.
"The Business Finance Partnership will help to develop these channels over the medium term so businesses seeking credit have more options available to them. Our aim is to create a more diverse financial infrastructure which better serves the needs of our small and medium-sized companies."