Leasing will be included in the UK government’s Business Bank, the first phase of which was launched Wednesday 10 April with an initial pot of £300m (351m) made available to lenders.
The scheme, organised through the Department for Business, Innovation and Skills (BIS), will provide wholesale finance to a range of lenders in a bid to boost lending available to SMEs.
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BIS said in a statement the Business Bank was focused on addressing "long-standing gaps" in SME finance and promoting "diversity" in the lending market. A BIS spokesperson confirmed to Leasing Life asset finance lenders are to be included within the scope of the scheme and said the department had been working with the Finance & Leasing Association (FLA) ahead of the launch.
The FLA has made repeated calls for the government to include leasing in the Business Bank and Julian Rose, head of asset finance at the FLA, welcomed the news and said the increase in leasing penetration rate announced by the trade association for demonstrated the growing appetite for leasing among UK businesses.
"However, the Business Bank’s new programme must be properly coordinated with the Bank of England’s Funding for Lending Scheme to ensure that Government interventions work through all parts of the finance markets," he added.
The scheme was first announced by Business Secretary Vince Cable late last year when he said £1bn of capital would be made available through the programme. The Business Bank will not be fully operational until 2014 but the first £300m tranche was opened now in order to make support available to SMEs "as soon as possible", according to Cable. The first transactions through the scheme are expected to take place this autumn.
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By GlobalDataThe Business Secretary said: "Small and medium sized businesses are still telling me that access to finance is their number one problem, preventing them from investing and growing. That’s why through the business bank we are developing a range of measures to provide businesses with the power to choose the type of finance that suits them.
"Today’s £300 million boost shows we are serious about increasing competition and diversity in the business lending market. Establishing a lasting business bank institution is a long-term project, but getting this money reaching SMEs as soon as possible is the first step."
The Business Bank will build on the Business Finance Partnership, set up in 2012, which has so far provided £55m in finance to SMEs through non-bank lending channels, matched by private sector capital, and BIS said the government welcomes proposals from a wide range of lenders for its Business Bank funding.
The BIS named various lending channels including "challenger banks", debt funds, asset-backed lenders, supply chain finance, and peer-to-peer lending.
In order to qualify for funding through the scheme, lenders should demonstrate how government could make commercial investments through managed investments or direct capital investments, according to BIS.
Applicants wishing to submit proposals can find more information of the application process, together with guidance, on the gov.uk website.
