British Business Bank – What Is It?

British Business BankBritish Business Bank

You may, or may not have heard of this before but The British Business Bank, or BBB, is the latest initiative to get more funding through to the SME sector.

To get an idea of why The British Business Bank has been set up then this quote from Vince Cable sets the tone;

“The government understands the frustration felt  by many small and medium-sized businesses around securing credit, especially from the big four retail banks. Many new, promising, growing companies simply can’t get the loans they need to expand on reasonable terms. Manufacturers, exporters, start-up companies are struggling to finance growth. We are going to help fix this.”

What is The British Business Bank All About?

There are some comparable models in other countries. The US Small Business Administration is one example, the German KfW another. So the model being used is not wholey innovative, but any attempt to relieve the business finance block should be applauded.

Many people will see The British Business Bank as being a new initiative, however we can go back to the 1931 MacMillan Committee report which recommended support for the same SME sector.

Back then this saw the creation of the Industrial and Commercial Finance Corporation (ICFC) in 1945 which was backed by the Bank of England. The ICFC was listed in 1987 under the name of 3i. It still operates today albeit more in the equity and venture capital arena.

All we are saying is that the British Business Bank has to some extent, been here before.

Will The British Business Bank Lend To My Business?

Ah! The $1m dollar question! No, sorry.

Well, actually that is a little misleading. The British Business Bank works with other business lenders, who will be looking to advance the cash your business is looking for. Rather than have a capital base or be centrally funded, the British Business Bank is more a facilitator of commercial finance.

The rationale here is that there is a lack of diversity in the business finance market in the UK, by easing the access to a wider variety of funders then it should in turn start to ease the flow of commercial finance. This concentration is not as big an issue in other developed nations.

Will The British Business Bank Work?

It should certainly help. There is certainly enough clout behind it to make it work. If you look at the website for The BBB then you get a feel for where things are going, it is not overly ‘banky’ and is upfront about wanting commercial finance lenders to come on board.

The BBB also has some good people in charge, so the positive signs are certainly there.

If you want any more information then please contact us on 01293 541333, email via the website here, or just add your comments above.

By David Farmer

Ref – Financial World Magazine, February 2014

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