The new British Business Bank is to be set up in Sheffield, according to a government announcement, as business secretary Vince Cable pledges another £250m for the project.
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.
Welcoming the news, the regional chairman of the FSB, Gordon Millward, said:
“Our members will welcome this commitment to setting up the Business Bank in Sheffield, which represents the confidence of government in the future success of the city as a key player in the UK’s finance sector.
“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.”
The increase in funding means that the state-backed bank, which is meant to help small businesses access finance, will begin with £1.25bn.
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.”
Last month Cable also announced that Ron Emerson, former group head of wholesale banking at Standard Chartered Bank, would head up the business bank.