It looks like the government is ready to embrace the new world of finance. A ?30m boost for three alternative lenders was announced today by the Department for Business, Innovation and Skills (BIS).The three lenders ? MarketInvoice, URICA and Beechbrook Capital ? will share the ?30m of government funding to offer SMEs alternatives to traditional bank lending. Invoice finance disruptors MarketInvoice are receiving ?5m. URICA is being allocated ?10m, to establish a new supply chain finance platform. It aims to provide a consistent channel of cash from institutional investors to SME suppliers, by enabling early payment of their bills to mid-sized growth companies. Mezzanine fund manager Beechbrook Capital was awarded ?17m and will establish a new fund to lend to SMEs focused on growth capital. Each lender has committed to attracting additional funding from private sector investors, with the total expected to boost the pool of credit available to SMEs from the three by more than ?70m. Business Secretary Vince Cable said: ?A lack of access to finance is still choking off too many small businesses, preventing them from growing, taking on new staff or investing in new equipment.? Currently, 85 per cent of all business loans are handled by the big four banks. This is the second allocation of funding by BIS. The first allocation was made in December, when four lenders (Funding Circle, Zopa, BOOST&Co, and Credit Asset Management Ltd) were allocated ?55m. The funding comes from the small business tranche of the Business Finance Partnership (BFP), through which the government committed to provide ?100m of funding for non-traditional lenders in order to diversify the sources of finance available to SMEs and improve competition. The seven successful bidders announced under this programme are expected to facilitate total lending of more than ?240m to SMEs by attracting private sector investment alongside government?s funding.
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