“The government has no plans to impose further targets on the banks, and focus will instead shift to George Osborne’s ‘credit easing’ strategy, the details of which are likely to be released in next month’s Budget statement. Any policy that emerges as part of the new Budget must avoid crowding out recent innovations in the UK financing landscape. It is crucial that alternative mechanisms of finance provision be allowed to fuel competition in UK financial services, and that next-generation providers of SME funding be given support. Vince Cable’s taskforce on alternative finance has pledged to examine how best to make the UK business funding market more competitive and dynamic. This initiative represents a great opportunity to recognize the potential of alternative sources of finance to step in where the banks are falling short.
“Private sector start-ups such as MarketInvoice and peer-to-peer loan platforms channel capital from new sources into the SME market. The government must support these innovative enterprises, which in the long run could revolutionize lending to SMEs and end the need for the government to subsidize loans through state-controlled banks. By providing flexible and cost-effective financial services to SMEs, MarketInvoice and other such businesses offer a means of improving the credit conditions of the UK and, ultimately, of helping to promote economic recovery and renewed growth.”