The UK government has announced today that it is planning to establish the new British Business Bank in Sheffield.

Business secretary Vince Cable has said that the government has pledged another £250m for the project.  The additional funding would mean that the state-run bank will begin with an initial capital of £1.25 billion.  The British Business Bank is being established to encourage and help small businesses access finance.

The Department for business, innovation and skills (BIS) said that the bank will begin operations with about 100 members of staff including credit risk analysts.  The department said that Sheffield was chosen for the bank's location because it has an unused building that was once used by the shrinking Capital for Enterprise programme.

It is believed that the bank will still need an approval from the European Commission to begin lending to businesses in the country.  Cable said that the initiative will help the UK's 4.9 million small and medium sized firms.

He said, "It is a new long-term institution which is helping to create more competition in the banking sector and give access to finance to businesses who are currently struggling with high street banks, to get the cash they need to invest in their future growth."