Following the Chancellor's recent Budget announcement, the Department of Business, Innovation and Skills (BIS) has set out how it aims to get finance to the businesses that need it - with some money available from this summer.
The first point of clarification – the Business Bank is not a bank in the usual sense. It will not lend directly to SMEs and will not appear on high-streets. The Business Bank, perhaps unhelpfully named, will be an overarching organisation with the ambition to improve the finance market for SMEs, open up access and coordinate existing government initiatives.
So, what is the Business Bank?
The Bank will be a formal institution which will take a broad approach to the finance market for SMEs and implement programmes using public and private funding to improve the finance market.
What are the Business Bank's objectives?
One of the primary objectives of the Bank is to establish itself as the single access point for SMEs, simplifying the funding process for business.
In order to do so the Business Bank will manage the government's existing finance schemes such as the Enterprise Finance Guarantee Scheme and Start Up Loans.
It will also seek to diversify the finance market through promoting competition and increasing supply through new finance providers.
When will the Business Bank start operating?
Setting the Business Bank up as a formal institution will take time. It is not expected to be fully operational until autumn 2014.
In the meantime BIS will be initiating the Bank's work through the government's existing finance schemes.
How will the Business Bank get finance to SMEs?
Rather than lending money directly to SMEs, the Business Bank will operate through intermediaries; new programmes and existing schemes like the Business Finance Partnership will provide public money for SMEs.
The good news is that £300m of the Bank's £3.9bn will start to become available from this summer. The first of the Bank's initiatives to diversify the finance market for SMEs sees a pot of £300m on offer, to be given to lenders divided who can attract additional private investment.
Applications for this money are now open and we will be working closely with the government departments behind the Business Bank to ensure that the programmes and initiatives offered reflect member needs.
For further advice on accessing finance for your small business, members of the Forum should call our helpline on 0845 130 1722.