Government on brink of £20bn SME loan scheme


Government on brink of £20bn SME loan scheme

Microscope contributor

The government is expected to unveil plans to increase the loan fund available for SMEs from the current £2m to around £20bn to ease the flow of credit.

The announcement, which the government has prepped major broadcasters for, follows on from several months of frustration for the government with the banks showing reluctance to pass credit onto smaller customers.

In scheme would work with the government, for a fee, insuring the loans handed out by banks.

SME lobby groups have been constantly calling for greater support and last week the Forum of Private Business revealed that its members were struggling to get credit with around a quarter of those it surveyed being turned away or being offered reduced borrowing levels.

There have been increasing calls for the government to do more itself to help SMEs and if as expected the loan fund increases it should offer an alternative source of credit for channel players and their customers.

The Conservatives have urged the government to underwrite £50bn in loans to help bolster UK plc.

Vincent Cable, Liberal Democrat shadow chancellor, posted a response on his website criticising the banks for not having done more already to help SMEs.

“The simple and obvious issue which has to be raised is why the partially-nationalised banks are not being required by the Government to maintain the flows of lending,” he said.

"But more than that, the Government seems to lack the bottle to break the banks' lending strike. It finds it much easier to use taxpayer-financed guarantees than to get tough on the taxpayers' behalf,” he added.

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