Govt helps banks resume business lending
Wednesday 14th January 2009, 8:59AM GMT.
Businesses struggling with their finances through the recession are to receive help from the government under plans unveiled by Peter Mandelson this morning.
Firms suffering with short-term cash flow problems and those with difficulties getting both short-term credit and longer-term investment are to be assisted by the government’s proposals.
A working capital scheme will secure up to £20 billion of short-term bank lending to companies with a turnover of up to £500 million, with the Department of Business, Enterprise and Regulatory Reform guaranteeing 50 per cent of this lending.
Additional bank loans worth up to £1.3 billion will be available for small firms with a turnover of up to £25 million under the enterprise finance guarantee scheme. The government will guarantee three-quarters of these loans and will be available through high-street banks.
Finally longer-term investment will be made available through the capital for enterprise fund. The government will provide £50 million and banks £25 million for smaller businesses who need equity for investment.
“UK businesses are the backbone of the UK economy so it is vital the government acts now,” business secretary Lord Mandelson said at the launch of the package this morning.
“We are absolutely determined to do everything we can to help companies through this global downturn.”
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