Small businesses across the Midlands have a powerful new financial ally in the shape of the new British Business Bank – with 3,000 firms in the region kick-starting £220 million worth of investment.
The increasing popularity of the Government-backed initiative emerged at a special panel discussion at PwC’s Birmingham offices hailing the launch of the new bank, which has £3.9 billion of Government resources at its disposal.
The Government has created the new British Business Bank, the 海角视频’s first economic development bank, to ensure that financial markets for small and medium-sized businesses are effective, helping entrepreneurial and growing companies prosper.
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And chief executive Keith Morgan revealed that West Midland firms were already benefiting from the bank’s support as the region continues its fightback from the recession.
Mr Morgan told the Post: “We are up and running. If you take the Midlands, there is about £220 million of lending and investment that has taken place, and the number of companies that are benefiting from that are 3,000.
“I do not think that this was prompted by the financial crisis but I think that the fact that it didn’t exist became clear because of the financial crisis.
“We all know that the SME sector is very important to any economy. There are close on five million of them that account for 50 to 60 per cent of private sector and employment.
“But they invest less than their European counterparts. Through investment, they can grow their business, and we should be making sure that this sector gets access to the finance that it needs.
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“We should have an organisation that is publicly owned and will act in a commercially minded way to address these problems.
“We have a marketplace which is dominated by the big banks but we believe there is a benefit in increasing diversity. In the last year, we have had a total of £780 million of new lending and new investment that has gone through the programme.
“We are working very hard to improve the supply of finance, to try to change the structure of the marketplace and get out the information so that SMEs know that these options are available.”
Mr Morgan said the manufacturing sector had already benefited from the new bank, which acts as an umbrella organisation locating money to lenders.
“Around 13 per cent of our support is going to the manufacturing sector. If you take manufacturing, only about six per cent of firms in the 海角视频 make things. Manufacturing is a driver of exports, absolutely and the finance that we deliver enables us to help firms create wealth. We cover all industries, but we are slightly weightier in manufacturing.”
The bank, launched in September 2012, has a total of £3.9 billion of resources, including £1.25 billion for new programmes – of which £375 million has already been allocated.
The programmes range across the spectrum of debt, equity and alternative finance. The bank will operate as a Government-owned financial institution once it receives European Commission state-aid clearance in autumn 2014.
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“The area of greatest need are companies that are at their early stage of growth. The intention is to build investment for the long term,” added Mr Morgan.
“We have been encouraged by the interest in the bank so far, from the CBI, the IOD, the FSB, the chambers of commerce. Everybody believes that there should be strong support for the SMe sector.
“If you take the amount of bank lending to small companies, from 2007 it has declined. There are both demand and supply issues. Small companies going through the financial crisis have decided to focus more on their cash resources.”