British Business Bank targets small firms in new lending initiative

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British Business Bank targets small firms in new lending initiative

The British Business Bank has unveiled a new initiative that it hopes will increase lending by high street banks to small firms.

It is to open its ENABLE programme to all banks who carry out lending to small businesses at present, which works by reducing the amount of capital such lenders need to hold to support these loans.

The plan has been announced after the Clydesdale and Yorkshire Banks - both subsidiaries of National Australia Bank - signed up for the first deal under the programme. This will back up £125 million of lending to smaller firms, with at least £50 million to be earmarked for products and companies that have not received any lending in the past.

Among those new areas are cash flow lending aimed directly at SMEs, something that may be critical for companies struggling with problems in this area, due to issues like late payment.

Automotive tooling and renewables are also being covered, while Yorkshire and Clydesdale banks are to set up an Emerging Technology Lending Unit.

The news will please many small firms, who have long complained that they have not been able to get access to the levels of funding they need to grow.

That problem prompted the establishment of the British Business Bank and according to business secretary Vince Cable, the latest announcement will build on progress already made in getting banks to do more to help out small firms.

He remarked: "I set up the British Business Bank to give small businesses access to alternative finance schemes that were badly needed. It is delivering and is supporting £1.8 billion of finance to over 43,000 smaller businesses.

"This new guarantee programme will make it easier for challenger banks to lend to small businesses and help to accelerate the transformation of UK banking into a more dynamic and competitive marketplace."

Chief executive of the British Business Bank Keith Morgan said: "Our ENABLE programme represents a significant scaling up of our firepower in making finance markets work better. The funding unlocked by the programme will make a real difference to smaller UK businesses."

Director for business and private banking at the Clydesdale and Yorkshire Banks Paul Shephard said the two lenders are "delighted" that they have been able to get involved with the new scheme, stating they they have shown a clear commitment to helping small businesses grow and will now be able to do much more to continue this.

The announcement may also provide a last-minute boost to the coalition government, amid concerns that neither it nor the political parties of Britain as a whole have grasped the needs of small businesses.  

This was emphasised this week in a survey by, which found 93 per cent of small firms want to see policy changes after the general election, irrespective of the composition of the government. 

It produced a manifesto for small business, which included a demand for improved lending conditions through a scheme that delayed repayments in a similar way to the student loans scheme.