Osborne’s Autumn Statement
A raft of measures to kick-start the economy and stimulate lending to for businesses was revealed in the Autumn Statement announced by George Osborne this week.
Notable measures include:
A £1bn Business Finance Partnership, whereby the government, in partnership with other investors will invest in funds that lend to SMEs, providing “a new source of investment outside the traditional banks”. ‘It will give these mid-cap companies a new source of investment outside the traditional banks,’ Osborne says. ‘If the Business Finance Partnership takes off, I stand ready to increase its size. And we will develop further partnerships ideas and ideas for new bond issuance to help Britain’s small and medium-sized firms.”
We have been in contact with relevant officials to open a dialogue to ensure that CDFIs are recognised and, hopefully, we can be involved as direct beneficiaries of this program
A National Loan Guarantee Scheme intended to cut the cost of borrowing for SMEs. Under the plan, the Government will underwrite the banks’ borrowing on the commercial money markets, enabling them to borrow more cheaply. The banks will then pass on the savings to the firms they lend to in the form of lower interest rates. According to research by businessZone.co.uk and AccountingWEB.co.uk two thirds of business owners believe that the new National Loan Guarantee Scheme will not benefit the UK’s smallest companies.
We will be contacting scheme designers to explore options for CDFIs to participate in this guarantee scheme
The CDFA, with the BBA, has been working hard to ensure the national bank CDFI referral system is in place. We were especially pleased to see this call welcomed in the Autumn Statement:
“The Government also welcomes the BBA’s intention to work with Community Development Finance Institutions (CDFIs) to put in place a system to refer unsuccessful loan applicants to CDFIs.”
Work to put this in place is ongoing but will no doubt make a lasting difference in customer flow to CDFIs.
It is vital that the measures that the government says are for the benefit of start-ups and small businesses make a difference at this end of the market. Micro enterprise and smaller SMEs are the lifeblood of the UK economy and CDFIs can penetrate this group perhaps where banks cannot. We must also ensure that any new measures include assistance to social enterprises. We will keep you apprised of any developments.
Download the full statement here