The Government has pledged £20 million of funding for an alternative lender

Business Secretary Vince Cable The British Government has pledged £20 million of funding for an alternative lender in order to fund small businesses in the UK, it was announced today.

Crowdsourcing lender Funding Circle will open up the £20 million fund to SMEs across the country, offering finance directly to businesses who are struggling to secure loans from banks.

The initiative, known as the Business Finance Partnership, represents the first time a British Government has made such a large commitment to business lending, with Funding Circle one of four successful bidders for the available fund.

Speaking at the Association of British Insurers’ Investment Conference, Business Secretary Vince Cable announced plans to make £55 million of Government funding to a number of finance suppliers in order to support SMEs.

Match-funding from the private sector is expected to raise a minimum of £55 million in addition, making at least £110 million available to small businesses over the coming years.

The announcement coincides with the recent news that the Government plans to create a £1 billion ‘business bank’ by 2014, designed to aid lending to businesses nationwide.

Alongside Funding Circle, funds will be made available to peer-to-peer lender Zopa, fund management firm BOOST & Co and specialist SME financer Credit Asset Management Limited.

In response to the news Laura McMullen, Business Development Director at Funding Circle, said: “Not only is this a huge vote of confidence for peer-to-peer lending, it’s a defining moment for the future of small business finance”.

“For too long, British firms have been held back by a banking monopoly, with businesses across the UK struggling to get the finance they need. Today is an important milestone in redrawing the financial landscape to give them a brighter future.

Laura added: “Thousands of people are already supporting British businesses in this way and are reaping the rewards. The Government will able to boost their efforts on a substantial scale by injecting money directly into the bloodstream of Britain’s businesses and driving economic recovery.”

Business Secretary Vince Cable said: “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.

“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.”


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