UK Business Secretary Vince Cable announced £55m of new SME funding will be made available to four finance suppliers through the Business Finance Partnership (BFP).
A £20m tranche will go to peer-to-peer lender Funding Circle, a move which the firm’s chief executive Samir Desai called "a huge vote of confidence for peer-to-peer lending" and "a defining moment for the future of small business finance".
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He added that, through BFP, the Government will "be able to boost their efforts on a substantial scale by injecting money directly into the bloodstream of Britain’s businesses and driving economic recovery."
Lessor and City of London Group (COLG) subsidiary Credit Asset Management (CAML) was also on the list, receiving a £5m funding allocation. COLG will part-match the government’s funding, chief executive Eric Anstee said he was looking forward "to sourcing similar mandates from institutional investors" to co-invest.
A further £20m was made available new fund management firm BOOST&Co, with £10m allocated to online peer-to-peer lending platform Zopa.
Giles Andrews, co-founder and chief executive of Zopa, which will use the cash to provide loans to sole traders, said he was "delighted" the government "has recognised that there are alternatives to the traditional financial institutions."
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By GlobalDataIn his announcement, Cable said: "Small and medium sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.
He added the funding announcement was just the type of help that the new government Business Bank, to open in 2014, would offer.
The recipients of the remaining £45m of BFP funding are due to be announced in the New Year following due diligence.
