The increase in funding means that the state-backed bank, which is meant to help small businesses access finance, will begin with £1.25bn.
Spokespeople from the Department for business, innovation and skills (BIS) said that the bank would begin with about 100 members of staff, including credit risk analysts. According to BIS, Sheffield was chosen as the department has an unused building, left over from the shrinking Capital for Enterprise programme.
However, the bank still does not have approval from the European Commission to begin lending, so is unlikely to be fully operational until autumn next year.
Business secretary Vince Cable insists that the bank will help the UK’s 4.9m small and medium sized firms: “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.”
Las month Cable also announced that Ron Emerson, former group head of wholesale banking at Standard Chartered Bank, would head up the business bank.
The national chairman of the Federation of Small Businesses (FSB), John Allan, welcomed the news: “Our members will welcome this further commitment to the Business Bank, which has a key part to play in fostering competition and ensuring businesses get access to finance they need to grow.”
He added: “The finance through the Business Bank needs to help very small and start-up businesses who we know find it hard to raise finance through the main high street banks.”
However, previous attempts by the government to lift lending to small businesses have not received an overwhelmingly positive reaction.
In 2011, Lord Oakeshott stepped down from this position as a Liberal Democrat party Treasury spokesman, after calling the Project Merlin scheme’s efforts to improve credit conditions “pitiful”. Many banks involved did not meet the lending targets set for them under the agreement.