New paper unveiled to help ease businesses' access to finance

A consultation paper to help boost an industry-led recovery has been launched this week by the government.

Business secretary Vince Cable and chancellor George Osborne unveiled ‘Financing a Private Sector Recovery’ which details plans to work closely with businesses and the financial community to ensure access to finance is no longer a barrier for companies looking to grow.

The paper sets out a range of options for businesses, exploring where the market is failing to provide and whether there is the need for greater government intervention.

Cable explained that businesses “need innovative ways to access finance from other sources to grow our firms and economy.”

He continued: “If we don’t anticipate and tackle finance barriers now we could face a big problem in the future. Left unchallenged, a lack of accessible finance for businesses could prevent the recovery accelerating.”

The paper explores a variety of finance options, including more use of equity and encouraging venture capital and business angels to invest in a wider range of businesses. It also aims to increase transparency in bank loan applications and to foster competition between banks and financial institutions. 

Commenting on the plans, director general of the British Chambers of Commerce, David Frost, said: “It is vital that the right approach is taken when dealing with the access to finance question.

“The situation is much more complex than simply forcing banks to lend when demand among businesses is anaemic. As the recovery gathers pace, we expect demand to rise along with some of the concerns businesses have articulated about bank lending.

“The banks must be as transparent as possible when decisions are made, and ensure that decision-making processes are not over centralised, tick box or removed from the front line.”

© Crimson Business Ltd. 2010