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UK: Government seeks to woo reluctant borrowers

Political imperatives are driving the background noise to UK SME finance. But the companies themselves don’t seem to be listening.

Any doubts that the UK coalition government intended to stimulate lending to SMEs as a priority were dispelled with its announcement of a new state-backed business bank last September. The aim of this new institution is to provide £1 billion ($1.63 billion) of new capital to help promote access to finance for SMEs with turnover of up to £25 million and mid-sized businesses with turnover of between £25 million and £500 million.

"The British Business Bank is being set up as a state-backed economic development bank charged with creating more effective and efficient finance markets for smaller businesses across the UK," says Ron Emerson, the bank’s recently appointed chairman. "We do this by bringing together public- and private-sector funds to address market weaknesses in the supply and diversity of finance – acting as a catalyst, if you like."

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