UK ‘needs new ICFC’

The government should help small firms by funding an initiative similar to 1945's Industrial and Commercial Finance Corporation (ICFC).


The government should help small firms by funding an initiative similar to 1945’s Industrial and Commercial Finance Corporation (ICFC).

The government should help small firms by funding an initiative similar to 1945’s Industrial and Commercial Finance Corporation (ICFC).

Speaking to the British Venture Capital Association (BVCA), Richard Lambert, director general of the Confederation of British Industry (CBI), claims that a modern-day ICFC could be a good way to channel funding to the UK’s small and medium-sized enterprises (SMEs).

The original ICFC was formed by the Bank of England and the country’s major banks to deliver a mix of long-term equity and finance to smaller companies, providing investment capital to around 11,000 businesses over 50 years.

When the banks sold their stake in the corporation, it became 3i, the listed private-equity group.

Lambert tells the BVCA that new ways need to be found to inject private capital into the market in order to kick-start economic recovery.

He states: ‘It’s clear that growing numbers of SMEs are going to be in need of the blend of equity and long-term capital that [the ICFC] used to provide – a role that turned out to be especially valuable during the turbulent times of the 1970s.’

Recent research from the CBI found that access to credit is still a main issue for businesses, with almost 60 per cent of those seeking finance revealing availability has decreased in the last three months.

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