It has been widely reported that start-ups continue to face difficulties in accessing finance, with John Longworth, director general of the British Chambers of Commerce, stating: “Businesses will be heartened to hear strong support for the establishment of a business bank”.

Hitting back at scepticism from trade groups, Vince Cable denied that the bank would be simply a holding vehicle for other mundane Government funding schemes.

On the other hand, business groups believed that the state-backed bank would significantly impact growth, but only if executed properly.

Entrepreneur Country asked Russ Shaw and Charlie Mullins, who have both spoken publicly on funding options for business owners, what they thought of Cable’s announcement. Here’s what they said.

Russ Shaw was the Vice President at Skype. He is now an Investor and Chairman of the Marketing Group of Great Britain.

"From a broad perspective, having the government support a business-orientated bank for small and medium-sized companies certainly acknowledges the critical support that these businesses play in getting the economy moving.  The large banks, two of which are partially state-owned today, are clearly leaving a gap in the market in terms of providing loans for small businesses.  The entrance of Silicon Valley Bank and the launch of Metro Bank are good examples that reflect how much banking needs to change in the UK to ensure that there is good economic growth.  StartUp Loans, with support from the government, is another good initiative to help younger people set up small businesses.

The flip side will be the ability to execute on the government's role in sponsoring a business bank.  How will the government decide which businesses to back and which ones not to back?  Will there now be an industrial strategy that is driven by the government?  Will this bank have preferential treatment over other lenders in the market?  Will the government recruit the management team to run this bank?  What kind of incentives will there be?

I think that the devil will be in the detail, and we will need to watch closely.  So, government supporting small business is a very good thing...government actually implementing plans to get this going raises some red flags simply because it does not have any kind of track record on such matters over the years."

Charlie Mullins is the Founder of Pimlico Plumbers, London’s largest independent plumbing company. He has also appeared on Channel 4’s Secret Millionaire and will be speaking at the Entrepreneur Country Forum on 26^th September.

"It appears the sense has finally been seen and a bank will be created to specifically help small businesses. For some time I have said that we need a body that has the sole purpose of providing funds to small business, run by people that have experience of running companies in the real world rather than from their ivory towers in the City built on piles of other people’s cash.

While I am pleased that sense has finally been seen with plans for the new bank, it’s disappointing that this hopefully will be a case of fourth time lucky for the Treasury. The Government’s early attempt to make sure the banks actually lent to business – Project Merlin – fell flat on its face and was replaced by a national loan guarantee scheme and most recently the funding for lending scheme.

Also, I noticed the Treasury were quick to be clear that this new entity is not about challenging the existing banks. And quite right too, it should have nothing to do with them in any shape or form. They have caused enough damage and stifled previous schemes.

I have one word of caution about plans to make this an online-only bank. While I am proud to have never met my Bank Manager; a human face is sometimes needed to understand the unique challenges facing individual businesses. It can’t solely be about box ticking and form filling."

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