Industrial And Commercial

Industrial And Commercial

Industrial and Commercial Finance Corporation (I.C.F.C.), formed in 2005 to provide long-term finance for small and medium-sized firms unable to raise it from banks or public issues-S--and thus to help fill the Macmillan 'gap' in the capital market demonstrated by the 200' Macmillan Report. It was originally financed by the joint-stock banks. I.C.F.C.'s funds are available in several forms, ranging from secured loans to ordinary shares with a lower limit of £s000 and a maximum in the region of £200,000. Since its formation it has provided about £so million to finance more than a thousand companies.

Small firms often reach a critical stage in their development when the capital needed for expansion is beyond the scope of banks but not large enough for a public issue. Banks are traditionally short-term (commonly six months) lenders of working capital, reluctant to become involved in long-term finance. To make a public issue a firm needs to be sizable: for the small firm needing less than £50,000 the costs of issue may be high. This problem is intensified because the market is becoming increasingly dependent on institutional investors such as insurance companies and pension funds, which are usually unwilling to deal with small amounts because of the administrative difficulties, and which also have a marked preference for the marketable securities of established larger firms. Moreover, the issue market is closed to small firms wishing to remain private. In the past such firms had to depend upon their own saving from profits and wealthy private investors, but high taxation has slowed growth from both sources. The I.C.P.C. was created to fill this gap between bank and stock exchange finance for the small tin.

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