Government issues Request for Proposals from prospective fund managers to manage its investment through the Business Finance Partnership.
The Government has today issued a Request for Proposals from prospective fund managers to manage its investment through the Business Finance Partnership (BFP).
The Government intends to invest up to £1bn alongside private sector investors on fully commercial terms through managed funds that lend directly to mid-sized businesses in the UK.
The BFP aims to ease the flow of credit to businesses in the UK by helping to diversify the sources of finance available.
The BFP forms part of a package of up to £21bn of credit easing measures announced at Autumn Statement to support smaller and mid-sized businesses that do not have ready access to capital markets.
The Chancellor said:
It’s crucial that mid-sized businesses get the loans they need to grow and create jobs, especially when the uncertainty in the global economy is making credit conditions harder.
The Business Finance Partnership will help these businesses by building new ways for them to get loans other than from their banks.
Today’s announcement relates to the first tranche of investment; there will be opportunities for fund managers to bid for subsequent tranches in the future.
Notes for Editors
In 29 November 2011, the Chancellor announced that the Government would launch a £21bn package of measures aimed at easing the flow of credit to businesses in the UK; as part of this, the Government confirmed it will make available an initial £1bn though the Businesses Finance Partnership (BFP) for investment through non-bank lending channels.
The Government is focusing first on loan funds that can lend directly to mid-sized businesses, and offering to co-invest up to a maximum for 50% of any such fund.
Fund managers participating in the BFP will only be able to lend to businesses with turnover of up to around £500m.
The BFP is alongside, but separate from, the National Loan Guarantee Scheme, which will allow banks to raise up to £20bn of funding guaranteed by the government to lend directly to smaller businesses with turnover of up to £50 million.
The Request for Proposals published today provides potential Managers with the necessary information to decide whether to submit a proposal to HM Treasury and provides the necessary information to ensure that their response is in accordance with HM Treasury’s requirements. The full document is available in the Banking section of the HM Treasury website.
It is intended that HM Treasury’s investment will be made in a number of tranches over two to three years. There is no set amount of the £1bn to be allocated through this first tranche of proposals.
The BFP will be operated by HM Treasury.