Vince Cable Unveils SME Lending Boost
A peer-to-peer lender backed by Lord Rothschild will be unveiled as one of the major beneficiaries of a Government scheme to stimulate small business lending.
Zopa, a company which promotes direct lending over the internet, will be awarded £10m in public funding to provide loans to small companies.
The award will form part of a £110m funding package unveiled by Vince Cable, the Business Secretary, as he attempts to revive a crucial component of Britain's stuttering economy.
The small business tranche of the Business Finance Partnership (BFP) scheme is designed to provide greater access to credit at a time when many SMEs are struggling to do so.
Ministers had hoped that George Osborne, the Chancellor, would unveil the details of the BFP in last week's Autumn Statement, but they were delayed by demands from Whitehall officials for additional legal due diligence.
Wednesday's announcement by Vince Cable's Department of Business, Innovation and Skills will name three other private sector companies that will be granted public money to stimulate small business lending.
Under the programme, the Government will provide £55m, with match-funding from the private sector expected to deliver at least the same sum, making at least £110m available to lend to small businesses.
Insiders said that the other successful bidders being named are: Funding Circle, a peer-to-peer lender which will receive £20m; Boost, a new market entrant, which will also receive £20m to set up a fund that will make loans of between £1m and £8m; and Credit Asset Management Limited, a subsidiary of City of London Group PLC, which will receive £5m to provide asset finance and professions loans.
Mr Cable is expected to say that the new awards, while modest in scale, will help to diversify choice for SMEs.
However, the £110m project is tiny in the context of Britain's SME financing requirements.
A new British Business Bank, which is being seeded with £1bn of Government funding, has yet to get off the ground.