Government Unveils Business Loan Support For Small Firms

Fri, 16 Jan 2009

The Government has unveiled a multi-billion-pound aid package to help small firms survive the economic downturn .

Small and medium-sized companies with a turnover of up to £500m will be guaranteed up to £20bn of short term business loans from four UK banks, which the Government will insure if a firm goes under.

The Government said the new measures are aimed at improving credit, cash flow and investment needs of Britain's small and medium-sized firms .

The support package also includes an Enterprise Guarantee Scheme, in which the government will guarantee up to 75 per cent of another £1.3bn in bank loans to small firms with a turnover of up to £25million.

Furthermore, a £75 million Capital for Enterprise Fund will allow the Government to invest in heavily-indebted small businesses where equity is needed. The fund will be launched with £50 million from the Government and £25 million from UK banks .

However, the proposal has raised many concerns that £20bn may not be enough as it restricts banks to lend sufficient amounts for businesses that may require larger sums.

The Conservatives said the measures were "too little, too late", arguing that ministers should underwrite loans of up to £50bn.
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