BUSINESS Secretary Vince Cable unveiled the latest funding aimed at boosting enterprise yesterday, pumping £32 million into three newcomers to the market in an attempt to offer more alternatives to traditional bank lending for small firms.
Three new lenders – Beechbrook Capital, Market Invoice and Urica – will use the cash to bring in additional private sector funds, with the total expected to boost the pool of credit available to small and medium-sized enterprises (SMEs) from these three lenders by more than £70 million.
Cable said: “A lack of access to finance is still choking off too many small businesses, preventing them from growing, taking on new staff or investing in new equipment.
“We are taking a range of actions to support SMEs and shake up business finance markets, including through the new business bank. This £30m announcement is an important boost for non-traditional lenders with innovative solutions. It will increase competition and create a more diverse and balanced market for business lending.”
Market Invoice, which was launched in February 2011, allows SMEs to auction invoices to a pool of investors. It has been awarded £5m.
New company Urica is being allocated £10m to establish a new “supply chain finance platform” to channel cash from institutional investors to SME suppliers by ensuring the early payment of bills.
Mezzanine fund manager Beechbrook Capital, which was set up in May 2008, is receiving £17m and will establish a new fund to lend to SMEs focused on growth capital.
The funding comes from the small business tranche of the Business Finance Partnership (BFP). It is the second allocation, following a £55m award to four alternative lenders in December.