What is Vince Cable’s Business Bank?

Back in 2012, the business secretary Vince Cable announced the creation of a new “British Business Bank”. The new bank would use £1 billion worth of government resources to secure additional funds from the private sector which could then be passed on to small and medium businesses in the form of loans. At the time of the announcement, Vince Cable was hoping to generate an additional £10 billion worth of new business lending.

Although “owned” by the government, the business bank operates independently. At the time of its creation, the bank was intended to generate a profit as well as to provide finance to small businesses.

However unlike most mainstream lenders, the business bank does not lend directly. Instead it operates in the “wholesale market”, providing capital to 80 other banks who then provide loans to small business owners.

According to figures released in June this year, the business bank has proven to be something of a success, helping over 30,000 companies in its first year of operation. Over £800 million pounds has been made available in loans to businesses who may have been unable to secure funding from other sources since the global financial crisis.

The British Business Bank hopes to extend further credit to small businesses who are traditionally seen as a risk to lenders. To help raise the profile of the bank and its services, the bank is also publishing a new Business Finance Guide designed to help owners better understand the funding options available to them.