The Government is to plough £1bn into the creation of a “business bank” to help firms that have struggled to access credit since the financial crisis.
The BBC reports business secretary Vince Cable will announce the plans to boost business lending at the Liberal Democrat conference in Brighton later today.
The bank will operate via existing lenders and start within 18 months. The Government hopes its investment will be boosted by the private sector.
Further details about where the Government funding is coming from will be announced as part of the autumn statement on 5 December.
The Government will offer both guarantees and equity as part of its business bank plans.
Cable will say: “We need a new British business bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high-growth companies that power our economy.
“Today I can announce we will have one. I am working with the Chancellor to develop a state-backed institution that will combine up to a billion pounds of new government capital with a larger private sector contribution.
“This will then apply further leverage through guarantees to support up to £10bn of finance to small and medium-sized enterprises and mid-sized business, a significant portion of all the lending available.”
Chancellor George Osborne first announced plans for a state-backed business bank earlier this month. The Institute for Public Policy Research has estimated that initial set-up costs for a state-backed business bank would run to £40bn.