Cable trumpets ‘intense discussion’ on finance

Interesting article from smallbusiness.co.uk


Jul 27 2010

Business secretary Vince Cable and chancellor George Osborne have launched an ‘intense discussion’ on the issue of access to finance for small businesses.

Cable and Osborne outlined the terms of discourse in Financing a Private Sector Recovery, a paper which sets out the range of finance options for different sized businesses and explores where the market is failing to provide support and if there is a role for government intervention.

Cable says: ‘I’ve heard the problems businesses are facing in getting bank loans up and down the country. They need innovative ways to access finance from other sources to grow our firms and economy. That’s why this green paper* is so important as we look to help viable firms get the money they need.’

The paper explores every major finance option, including more use of equity and encouraging venture capital and business angels to invest in a wider range of businesses. In addition to this, the paper sets out options for the finance sector, such as an insolvency moratorium on companies restructuring their debt, increasing transparency in bank loan applications and fostering competition between banks and finance institutions.

Osborne says: ‘As the economy recovers, it is crucial to ensure that the supply of finance supports rather than constrains demand and business confidence. If businesses are to play their part in promoting economic recovery it is important that they are able to access a diverse range of finance choices in a stable macroeconomic environment.’

The paper also addresses existing government schemes, such as the much maligned Enterprise Finance Guarantee programme.

A survey by the British Bankers Association recently showed that banks lent just £900 million to small businesses in 2009, which represents less than a quarter of the average lending over the past five years.

For more information about the consultation, click here

*According to Wikipedia, a Green Paper – in the lexicon of politics – means: 'A tentative government report of a proposal without any commitment to action'