Vince Cable, Business Secretary, has said that the ?1bn Government Business Bank is set to incorporate an agency to parcel up small firm debt and sell it to investors.
The Business Secretary said that an agency to provide business finance is in the planning stage and will be packaging loans into a number of bond types, which will come with a state guarantee that has the potential to attract a new money source into the debt market for SMEs.
The initiative would involve ?securitisation?, associated with a type of economic engineering that resulted in the crisis in the economy.
Cable spoke to The Daily Telegraph, saying that there would need to be a high degree of care shown by the Government regarding the agency?s design due to the associated risks with securitisation. He said:
?An agency is part of the current thinking. We?d need to think it through very carefully and decide exactly what role government guarantees and financial support would play.
?A new version of securitisation does have a future. Various attempts have been made to relaunch it since the financial crisis and none have quite worked. But it?s one of the ways to get money into small businesses and we?ve got to try everything because there is a serious problem of supply of finance, not just demand.?
Cable announced a Business Bank in September. The bank intends to offer an alternative finance source to SMEs.
He said that the ?1bn venture will receive support from private partners, which will provide ?10bn of finance capacity.
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Source: http://www.psfinance.co.uk/lending-boosted-by-sme-bundle-1477.html
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