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A state-backed bank for small business

The Government has announced plans to set aside £1bn to be made available as loans to small business, to help get the economy moving again. Amid concerns that such a state backed business bank would take some time to put into action, members of the Government pledged that the initiative would be fast-tracked through the legislative process in much the same way as military Urgent Operational Requirements are.

There is also some confusion as to exactly how the money would be made available. As yet unnamed, some believe the new institution could operate through a bank but finding one that has its hands clean enough to engender confidence in the customer community might be problematic.

For example, the Bank of England initiative, called ‘Funding for Lending’, which is now operational, makes £80bn available to banks for cheaper lending. However, this has not trickled down to small business owners who find finance remains very hard to get. The Federation of Small Businesses has said that almost half of all small concerns applying for loans are still being refused.

As a consequence, various lobby groups are pressing the Government to find other ways to make the money available – the consensus being that a way must be found make the finance readily available to entrepreneurs so they are encouraged to move their ideas forward. Otherwise the purpose of the initiative will be lost.

Keeping abreast of such initiatives is a key task undertaken by accountants for contractors, enabling them to offer clients the most up to date advice as part of their service.

Posted by Peter
October 1, 2012
Small Business

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