How Creation of a Business Bank Could Save Economy; Better Access to Finance Will Feature High on Companies' Wish-Lists When the North East Independent Economic Review Is Announced Today. RUTH LOGNONNE Reports

The Journal (Newcastle, England), April 11, 2013 | Go to article overview

How Creation of a Business Bank Could Save Economy; Better Access to Finance Will Feature High on Companies' Wish-Lists When the North East Independent Economic Review Is Announced Today. RUTH LOGNONNE Reports


Byline: RUTH LOGNONNE reports

ACCESS to capital has been a challenge for many businesses in the North East for some time, and the economic downturn and new regulation has made many banks more reluctant to lend to smaller and medium-sized businesses.

It has become increasingly important as companies across the region look to expand, particularly those involved in exporting and developing new products.

There is a danger that company growth plans will continue to be curtailed unless businesses have access to finance which reflects order books, rather than invoicing or guaranteed by personal assets.

The North East Independent Economic Review, which is the culmination of more than six months' work by Lord Adonis, chair of the six-strong economic review team, stated a need to significantly improve access to finance.

It said: "Given the range of business demand for access to finance and banks' reluctance to lend there is a need to significantly improve access to finance.

"The North East LEP needs to develop three particular areas to support economic growth, and play an oversight role in the investment of public sector funds in business investment and investor readiness actions.

"This includes exploring the potential for the establishment of a regional business bank to meet the needs of companies and/or for the proposed British Business Bank to be located in the North East.

"The North East LEP will establish a North East Finance and Investment Board to work with regional and national agencies to oversee access to finance."

The Government yesterday launched the first phase of its Business Bank, announcing that PS300m will be invested in the venture.

The money will be the first slice of PS1bn of new capital, with the aim of boosting smaller firms (SMEs) struggling to access finance.

Ministers said they expected the first transactions will take place by the autumn, although applicants were urged to submit an expression of interest by May 22.

Business Secretary Vince Cable 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.

"This PS300m 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 bank will not be operational until next year, but the Government said it wanted to make support available to small and medium-sized businesses as soon as possible in advance of this.

The region has benefited from a series of funds operating under the Finance for Business North East banner, including the PS5m North East Micro Loan fund; the PS15m North East Proof of Concept Fund; the PS20m North East Accelerator Fund; the PS25m North East Technology Fund; a PS7. …

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How Creation of a Business Bank Could Save Economy; Better Access to Finance Will Feature High on Companies' Wish-Lists When the North East Independent Economic Review Is Announced Today. RUTH LOGNONNE Reports
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