Latest Public Sector News

12.12.12

Small businesses to benefit from peer lending

A £110m lending scheme is to be introduced to help small businesses, business secretary Vince Cable will announce tomorrow.

The ‘peer-to-peer’ schemes cut out banks by matching savers directly with borrowers via the internet.

The Government will fund £55m, and expects to match that amount with funding from private companies. The money represents the first tranche of £100m on offer through the Business Finance Partnership.

The loans will typically be on three-to-five year terms, starting at around £10,000 through to £500,000, and will have an interest rate of around 7-8%.

Business secretary Vince Cable said: “Small- and medium-sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.

“Today's funding announcement is just the type of help that the new Business Bank will offer. The Bank, which will be operational by 2014, is being designed to tackle these long-standing, structural gaps in the supply of finance for SMEs.”

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