New small business funding measures must be considered, Cable admits

The government needs to consider "new mechanisms" other than those already introduced to encourage bank lending to small businesses, Vince Cable has admitted. 

Speaking to The Guardian, the business secretary defended the Project Merlin agreement, which saw the UK's biggest banks committing to lend £76bn to small businesses, but accepted that other methods need to be be considered.

"I think the Merlin agreement, contrary to some of the criticism, has been useful," he said. "But there is a deeper problem and that is why new mechanisms have to be looked at."

Responding to chancellor George Osborne's announcement of a plans to introduce credit easing, Cable told the newspaper there were "procedural issues" with the policy, such as the small size of the small business bond market. 

However, he added that securitising small business loans could be one solution to boosting entrepreneurial growth. "It would have to be coupled with measures to ensure that the banks ensure that credit goes where it is supposed to go," he claimed.