Major banks across the UK are in talks about setting up a small business fund to provide cashflow in the small to medium term to small businesses. The proposed fund would be run by a new body and it would operate away from the everyday runnings of the major UK banks.

Details surrounding this fund are only brief at this moment in time, however, it is understood that each major UK bank will contribute tens of millions of pounds to the centrally administrated fund which would then in turn invest in a number of small UK businesses. As it stands, the fund is completely separate from any other developments with the government so if the fund is to go ahead it will need regulatory approval.

Obviously the economic downturn has had a huge impact on the growth of small businesses, and for some this recent move by the banks might not be enough to pull businesses out of trouble. It’s a different approach from banks investing in small businesses individually, we will have to see how having the banks come together will work.