Cheap Lending for SMEs

27 March 2012

A scheme to boost the supply of bank lending to small companies by £20 billion went live on 20 March 2012, after the European Commission approved the government plan.

The National Loan Guarantee Scheme will lower the cost of bank loans for smaller businesses with turnover of up to £50 million. The Treasury has put in place mechanisms to ensure that the cheaper cost of funding is passed on to SMEs.

Aldermore, Barclay, Santander, Lloyds and Royal Bank of Scotland have all so far signed up to the scheme.

In addition, the government will also help businesses raise funds from non-bank sources by making available £1bn through a Business Finance Partnership, to invest in mid-sized businesses and SMEs in the UK. This will initially focus on co-investment with the private sector through loan funds.

More details are available on www.hm-treasury.gov.uk/nlgs.htm