Vince Cable outlines plans to support SMBs
The government has given the go ahead for a £1 billion lending scheme aimed supporting small to medium businesses.
Business secretary Vince Cable announced the lending bank at the Liberal Democrat conference today, as the coalition shifts its focus away from austerity to supporting business growth.
The aim of the scheme is to give SMB access to funding in order to aid business expansion, supplying the bank with £1 billion to start lending to private companies. It is hoped that the loan access could eventually support up to £10 billion in new and additional lending when fully operational the government said. More detail on the bank will be available later this autumn.
Many companies have highlighted a lack of access to funding which is holding them back for growth, with many SMBs in the UK reasonably confident in their ability to grow their business despite the difficult climate.
According to a survey from the Federation of Small Businesses last week, 21.6 percent of SMBs had applied for loans in the past few months, but the number of refusals has grown from 40.6 percent to 42.4 percent. A report from German business software vendor SAP also showed that businesses operating in its channel were intent on growing, but often needed access to loans.
Cable says that the UK has failed to support business for growth with access to lending as other countries have, and “desperately” need support from the bank which will operate ‘arms-length’ from the government.
“For decades British industry has lacked the sort of diverse, long-term finance that is quite normal elsewhere,” Cable said in a statement. “We need a British business bank with a clean balance sheet and a mandate to expand lending rapidly and we are now going to get it.
“Alongside the private sector, the bank will get the market lending to manufacturers, exporters and growth companies that so desperately need support.
“Having a functioning, diverse supply of finance is an integral part of the Government’s industrial strategy.
“It is all about making the right decisions now to secure our long-term industrial success.”
The coalition has begun to adapt its approach to stimulating a financial recovery, and while it has made some moves to support business, such as the Funding for Lending Scheme, many are struggling with tightened spending.
According to the British Retail Consortium, business operating in the retail space have seen spending growth slow by half since the Lehman Brothers bank collapse
The BRC has called on Business secretary Cable to address falling consumer confidence which is hurting sales.
Year on year growth has averaged 2.1 percent growth over the last two years, compared to growth of 4.5 percent before the crisis. In 2008, the year following the collapse, revenue growth grew by just 1.6 percent, and has largely failed to recover since.
British Retail Consortium Director General Stephen Robertson advocates policy changes such as freezing business rates, or risk further slowing of growth. “Four years on from this key event in the banking crisis, which sent retail sales plummeting, sales growth is still less than half what it was before. Sales volumes are now going backwards.”
“Any successful economic fight back needs a return to strength for the retail sector. It’s not enough just to talk about growth. We need the Government to rebuild confidence, support customers and retailers and get spending going again by holding back the costs it is responsible for.
“Scrapping the postponed fuel duty rise, now due in January, and freezing Business rates next year are top of my list.”