The government announces that 1 billion pounds will be made available to small businesses to help growth. Is this another PR stunt or will the money really be available

The government announced on Monday it would allocate 1 billion pounds to a new state-backed ‘Business Bank’ in the aim of lending to small businesses who are currently starved of loans from the larger institutions.
The bank which is yet to be named would operate through the wholesale market and would be a capital support for existing banks. This in turn would operate as a security to hopefully be backed by provide capital and support up to 10 billion pounds worth of loans via the high street banks.
“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,” Cable told a Liberal Democrat party conference in Brighton, southern England.
Mr Cable has continued to complain over the last 2 or 3 years that small businesses need to grow and they are being suffocated by not having the finding available to them to do so. Limited growth is hindering the economy and allowing the private sector, in particular small businesses to prosper will have a knock on effect to the whole economy and start he cogs turning for us to elevate us about of this recession.
Vicky Redwood, chief UK economist at Capital Economics, said that this would take time to take effect , but it was  start and definite move in the right direction.
“It is not going to get off the ground immediately. It is something that might help more in the medium term than the short term,” she said.
“There has been concern for some time that small businesses in the UK are particularly dependent on bank finance to a greater extent than in other countries and that it would be good to develop some other forms of finance for small firms. There is a problem there, and this should help to solve it,” Redwood added.
“But I don’t think it would do a lot to improve the overall economy’s prospects in the next 12 months.”
“The country must not get stuck on a downward escalator where slow or no growth means bigger deficits leading to more cuts and even slower growth, The super-rich can’t move their chateaux to Monaco or Switzerland, so let’s get on with it and tax them here,” Cable said to applause.
The FSB (Federation of Small Businesses) said companies desperately needed loans to be able to grow. “In each quarter this year, around 40 per cent of firms that have tried to access finance have been refused,” said FSB Chairman John Walker

This Business bank has a lot of creases to iron out, and sounds a great idea on paper – but if its like 90% of the stuff that comes out of Vince Cable’s mouth then its surely headline grabbing waffle!  Its a shame really, because I am sure he’s a nice bloke with good intentions, but he doesn’t always have the backing of the decision makers to help realise his ideas. (Danny Molt)

Dean Williams

Dean Williams is a design and marketing blogger working for Print-Print Limited, promoting business and building brands through quality print marketing. If you’re interested in small business promotion then please get in touch hello@print-print.co.uk