News

March 28, 2013

Boost to 'alternative lending' for SMEs

An additional £70 million of lending is to be made available to SMEs, as the government seeks to increase access to finance.

Currently, 85% of all business loans are still handled by the big four banks.

Now three new lenders — Market Invoice, URICA and Beechbrook Capital — will share more than £30 million of government funding offering SMEs alternatives to traditional bank lending.

Each lender will attract additional funding from private sector investors, bringing the total pool of credit available to more than £70 million.

The online platform Market Invoice allows SMEs to raise funds by selling individual invoices to a pool of investors. It has been awarded £5 million. URICA is being allocated £10 million. It will establish a new supply chain finance platform to provide a channel of cash from institutional investors to SME suppliers. The mezzanine fund manager Beechbrook Capital is receiving £17 million.

Business secretary, Vince 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. Today's £30 million announcement is an important boost for non-traditional lenders with creative and innovative solutions. It will increase competition and create a more diverse and balanced market for business lending."

This funding comes from the small business tranche of the Business Finance Partnership (BFP) and it is the second allocation of funding by the Department for Business, Innovation & Skills (BIS). The first allocation was made in December 2012, when four lenders (Funding Circle, Zopa, BOOST&Co, and Credit Asset Management Ltd) were allocated £55 million.