Small business groups call for new bank

Small business groups have welcomed the idea of a new bank dedicated to SMEs.

A Government review aims to establish whether such a bank - a new version of the Industrial and Commercial Finance Corporation (ICFC), now private equity firm 3i - is needed to help small and medium-sized enterprises (SMEs) out of the recession.

The ICFC was set up in 1945 by the Bank of England and major commercial lenders to provide capital to SMEs.

In a recent survey, the Forum of Private Business (FPB) found that 45% of respondents would like to see a bank set up specifically for SMEs.

Jane Bennett from the FPB told More Than Business News: "There is currently a need for viable businesses with growth potential to be able to access the finance required and we would welcome the introduction of a modern-day Industrial and Commercial Finance Corporation/3i in order to support those firms."

However, she warned that the Government should be careful in its consideration of the investment profile and market for such a scheme, citing the case of Natixis, a similar SME investment bank in France, which posted a €1.84 billion (£1.59 billion) loss in the first quarter of 2009.

John Wright from the Federation of Small Businesses said: "The FSB would welcome a bank to provide much needed finance to SMEs and high-risk firms that operate in business sectors such as health care, digital media and green technology.

"Small businesses are doing all they can to survive the recession but they need better support from Government and the banks."