Two of the parties in the Assembly have called for a new bank to be set up to speed up lending to small businesses here in Wales as we reported yesterday. Both the Welsh Conservatives and Plaid Cymru are criticising each other's proposals so we've invited them to set out what makes their ideas unique and better-placed to help businesses here in Wales. You can read the view from Plaid Cymru here but below, the Welsh Conservatives' Shadow Finance Minister Paul Davies sets out his party's vision for a network of local banks to be known as Invest Wales.

99% of the Welsh business sector is made up of SMEs. Wales has the worst business start-up rates of anywhere in the EU. We know what the problems are, and the Welsh Conservatives have a plan: Invest Wales.

Invest Wales, launched on Monday, is a vision for supporting access to finance for micro, small and medium sized businesses. The model is based on a selection of key characteristics of international and national financing models.

These are: the German Sparkassen,local savings banks which lend to SMEs keep repayments within the local area; the *Business Development Bank of Canada *which tackles the lack of expertise possessed by some entrepreneurs; the Small Business Administration (USA)which provides government-backed lending on part of the loan.

We also looked to Handlesbanken which is the only Swedish bank which avoided discussing state support in the Swedish 1990s recession and is now expanding internationally, and in the UK, the Bank of Essex – a partnership between Santander and the local authority; and the Funding for Lending scheme, the Bank of England’s flagship scheme to help banks lend more to businesses.

Welsh Conservative proposals would reform the Welsh Government’s business organisation Finance Wales which is failing to effectively engage with businesses throughout Wales.

A newly established Invest Wales would have an overarching Board separate from the Welsh Government, which would report quarterly to the Finance Committee; like the Bank of England.

Regional Invest Wales board members would manage six regional hubs, which invest money locally. These hubs recognise the complex economic differences of each area of Wales.

In each region Invest Wales would provide finance through a partnership with a high street bank or other financial institution with a high street presence.

Our proposals are cost-effective, ensuring public money is spent in the best way – we would not need to construct costly buildings – and public money wouldn’t be given to the banks; administration of the scheme would be monitored and controlled by the Invest Wales Board members.

Welsh Conservatives believe that by trying to tackle any business plan deficiencies, rather than turning down the application flat, Welsh entrepreneurs and ideas will thrive.

This is not a proposal to take business away from the high street banks. This is gap funding.

When a high street bank can’t provide support, the various levers that the state has at its disposal must be used to its best advantage.

By adding some state investment, banks should be able to take on more small loans, in partnership with the Welsh Government.

Invest Wales is more than just a name. We chose it because it represents our passion for investing in the future of Wales. We also think it’s more important that we get the service right, rather than giving the Royal Bank of Scotland thousands of pounds to buy back the brand ‘Bank of Wales’.