Business Organisations Attack Loan Guarantee Scheme

Fri, 20 Feb 2009

The government’s £1bn loan guarantee scheme for small firms has so far failed to kick-start corporate lending, according to analysis by the Financial Times.

The newspaper revealed that only around £12m has been lent to companies under the scheme in the four weeks since its launch.

Gordon Brown last week defended the government’s record on helping business by repeatedly citing the £1bn loan guarantee scheme as evidence of "what we (the government) have done for business" .

According to the FT, the Prime Minister told MPs that "60,000 businesses have already benefited" from state initiatives to help cope with the credit crunch and recession.

But the paper reports that the 60,000 figure is linked to a scheme to help businesses defer tax and that the department for business has refused to state how many companies have been helped under the £1bn loan guarantee scheme or how much funding has been committed.

Phil Orford, chief executive of the Forum of Private Business, said: "Government measures to underwrite bank lending to small businesses are not being delivered."

Stephen Alambritis of the Federation of Small Businesses added: "There’s only a trickle of lending. The concept of banks being helped to help the economy is not working."
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