The bank, which was formally launched last month but will only be fully operational in the second half of 2014, has been developed by the Department for Business, Innovation and Skills (BIS) as a state-owned vehicle through which government finance initiatives are to be channeled, specifically to SMEs that are struggling to get funding via traditional streams.
“Small businesses are working hard to fuel our recovery and help us build a stronger economy,” said deputy Prime Minister Nick Clegg, announcing the additional funding today.
“I am determined that we do all we can to help companies that have struggled to get the investment they need. Investment that means they can employ those extra people, take on that new order and buy new equipment.
“The British Business Bank will give smaller companies who have struggled to get loans in the past easier access to millions of pounds of cash to grow and create more jobs,” he added.
The funding will be used to support new market entrants and later stage venture capital and asset-based finance. Since it was first announced in 2012 the Business Bank has taken over management of existing BIS access to finance schemes aimed at SMEs, such as the Enterprise Finance Guarantee.
But shadow business secretary Chuka Umunna said the government had “failed to get lending going to businesses, in particular smaller firms, with business lending falling by more than £12 billion in the last year”.
"Now into their fourth year in office, scheme after scheme trumpeted by ministers has failed to significantly improve access to finance for our wealth creators,” he said.
“Labour is backing plans for a proper British Investment Bank supported by a network of regional and local banks so that firms across Britain can get the finance they need to invest and grow.”
Business secretary Vince Cable said the business bank was "a new long-term institution which is helping to create more competition in the banking sector and give access to finance to businesses currently struggling with high-street banks to get the cash they need to invest in their future growth.
“The British Business Bank is fixing a big long-term problem in our banking system and it is set to unlock up to £10bn of finance over the next five years to help small and medium-sized businesses grow.”
To date the Sheffiled-based Business Bank has committed around £45m as part of the investment programme, which BIS claims will unlock and additional £80m in private sector financing.
