The Business Secretary Vince Cable has announced the creation of the Business Finance Partnership to ease the flow of credit to UK companies.
The Government has made £55 million available, which it expects to be matched by private sector donations, bringing the total up to £110 million.
Peer-to-peer lenders and other financiers will allocate funding, and the first four successful bidders for partnerships have already been announced. These are:
- Funding Circle, a peer-to-peer lender that will receive £20 million;
- Zopa, which will offer £10 million in peer-to-peer loans through its website;
- Boost&Co, a fund management company that focuses on small growing companies, will receive £20 million for smaller loans;
- Credit Asset Management, will receive £5 million to provide specialist financing to SME’s.
“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,” said Mr. Cable.
“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.”
The allocation of remaining funds will be announced in the New Year.
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