New bank to lend exclusively to small firms
City financiers plan to open enterprise bank
A group of city financiers plans to launch a new bank that will lend solely to small businesses.
The British Enterprise Bank (BEB) will take deposits from the public but will only lend to small and medium-sized firms. The team of bankers will today begin an eight-week £100m fundraising initiative, that will target private equity groups, hedge funds and wealthy individuals, with the aim of starting trading early next year.
Unlike the new retail bank Metro Bank, the BEB will not have a high street presence, but instead will operate its 23 branches mainly on business parks across the regions, so that small business owners can deal directly with the bank managers.
Among the team of bankers backing the venture is Jono Shorrock, a former senior banker at Merrill Lynch and Morgan Stanley. He told the Sunday Times: “The plan is to actually lend to small, viable companies. Small businesses employ the most people in recoveries and this bank will help us out of the downturn.”
The BEB has been welcomed by lobby groups, who have repeatedly called on the government to tackle the problem of banks refusing to lend to small companies.
Phil McCabe from the Forum of Private Business told Startups: “The British Enterprise Bank cannot come soon enough for many business owners in the UK struggling to access affordable finance from high street banks regardless of the viability of their companies.”
However, he added that traditional banks must do better by their small business customers by providing more cost-effective finance, if private enterprise is to be the catalyst for sustained economic recovery.
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