LONDON (SHARECAST) - Business Secretary Vince Cable is set to announce the creation of a one billion pound business bank to help increase lending to companies.
He will tell the Liberal Democrat party conference in Brighton that the bank would "get behind" good businesses and be up and running in 18 months.
The government will put up £1.0bn and hopes this will be matched by private sector investment.
The bank will be operated via exiting lenders.
In his speech, which has already been released to the press, Cable will say: "We need a new British Business Bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high-growth companies that power our economy."
"Today I can announce we will have one. I am working with the Chancellor to develop a state-backed institution that will combine up to a billion pounds of new government capital with a larger private sector contribution.
"This will then apply further leverage through guarantees to support up to £10bn of finance to SMEs [small and medium enterprises] and mid-sized business - a significant portion of all the lending available."
Questions have been raised about who will be responsible for allocating the funds and how risky the loans will be if they are to firms that have already been turned down by lenders.
Further details, including where the state funding will come from and the bank's operation, will be revealed in the Chancellor's Autumn Statement on December 5th.
The move was welcomed by the British Chambers of Commerce, which has been lobbying for a business bank.
"The funding announced by Vince Cable is the first step in a journey toward a British business bank that enables new and growing companies to get access to capital in the same way that they do in Germany, South Korea, and the USA," said its Director General John Longworth.
LONDON (SHARECAST) - Business Secretary Vince Cable is set to announce the creation of a one billion pound business bank to help increase lending to companies.
