UK business secretary Vince Cable has announced plans to launch a £1bn government-backed investment bank to fund struggling small and medium enterprises and exporters.

The new venture will combine £1bn of new government capital with a larger private sector contribution to support up to £10bn of finance to small and mid-sized business, Cable said at the Liberal Democrat party conference in Brighton today.

“This is no time for the state to be stepping back. We need a new British business bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high growth companies that power our economy,” Cable said.

John Cridland, CBI director general added: “A new-style boutique, government-backed bank for growth firms can bring something new to the business lending toolkit. The big gripe today from many growth businesses is a gap in the market for long-term investment finance. The new £1bn wholesale fund will enable banks to provide ‘patient capital’ to high growth businesses.”

Cridland notes that the new bank has the potential to support lending and help small and medium-sized businesses grow by bringing together all existing support into a one-stop shop. The bank, he said, could also play a vital role in packaging up and selling debt from medium-sized companies, allowing them to access vital finance streams.

The government is said to be working “swiftly” to get the bank up and running as quickly as possible.