Government unveils details of SME credit easing plan


Government unveils details of SME credit easing plan

Simon Quicke

Details of the government's plans to ease the supply of credit to hard pressed SMEs has finally been unveiled a day before the Budget.

The National Loan Guarantee Scheme is offering firms with a turnover below £50m with access to money at a single percentage point lower than commercial rates.

The major high street banks - Barclays, lloyds, RBS and Santander - have all signed up to the scheme which is guaranteed to the tune of £20bn by the government.

The government will guarantee the banks borrowing making it possible for the credit to be made available at a cheaper than normal rate.

"The government promised to help small businesses get access to lower interest rates. Today we deliver on that promise with a nationwide scheme," said the Chancellor George Osborne.

There have been mixed results of other government plans to ease credit with the much trumpeted Project Merlin, signed up to by most of the same banks, failing to hit its targets for SME borrowing.

Recent figures have also indicated that getting access to credit from banks might not be the crucial issue with many smaller firms turning away from relying on finances to underpin their operations.

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