In September of this year it was announced that a brand new government-funded bank will soon be launched with the main aim of helping small to medium businesses (SMEs).
A statement from Vince Cable, the business secretary, emphasised the need for small to medium businesses to be able to borrow small sums of money at reasonable interest rates.
The new bank will be aiming to attract private sector funding in the hopes of being able to release around £10 billion to lend to small manufacturing businesses and other similar enterprises. These loans will be specially tailored towards the needs of SMEs, with flexible repayment schedules, lower interest rates and lower minimum loan amounts.
Saving money and cutting costs are essential to any SME. They may have smaller overheads than larger companies but there is usually more risk involved as any negative impact on income is felt severely.
As a smaller business there is less room for any loss to be absorbed. Being able to use websites to shop around for the best deals on electricity has helped in recent years, but more is still needed.
The government has announced plans to help small businesses by offering grants and other forms of financial aid. The opening of the new bank is just one part of a larger plan to aid independent businesses in the struggle against retail giants and multi-nationals.
The announcement of the new bank follows hot on the heels of similar schemes being put in place by some of the best known high street banks.
Lloyds TSB and the RBS have introduced lending schemes aimed solely at SMEs. Some packages allow for a minimum borrowing amount of just £1,000, and some have lower interest rates. They also offer greater flexibility in terms of repayment schedules than most other loans.
These banks have been able to offer these packages due to the same government initiative to help small to medium enterprises that has prompted the launch of the new bank. The coalition government has made promises to help out smaller business owners and so far it seems these promises will be kept.