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Three new lenders – Market Invoice, URICA and Beechbrook Capital – will share more than £30m of government funding.
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 these three lenders by more than £70m.
“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,” said Cable
“We are taking a range of actions to support SMEs and shake up business finance markets, including through the new business bank.
“This £30m announcement is an important boost for non-traditional lenders with creative and innovative solutions. It will increase competition and create a more diverse and balanced market for business lending.”
The funding comes from the small business tranche of the Business Finance Partnership (BFP).
This is the second allocation of funding by the Department for Business, Innovation & Skills. The first allocation was made in December, when four lenders (Funding Circle, Zopa, BOOST&Co, and Credit Asset Management) were allocated £55m.
The seven successful bidders are expected to manage total lending of more than £240m to SMEs by attracting private sector investment alongside government funding.
Market Invoice, which allows businesses to raise funds by selling individual invoices to a pool of investors, has been awarded £5m, while URICA is being allocated £10m to establish “a supply chain finance platform” to provide cash from institutional investors to SME suppliers by enabling early payment of their bills to mid-sized growth companies.
Mezzanine fund manager Beechbrook Capital is receiving £17m and will establish a new fund to lend to SMEs focused on growth capital.