Loans scheme could help small and medium-sized businesses

By Joel Stanier

Chancellor George Osborne has announced a new £20 billion scheme to help small and medium-sized businesses get access to low-cost loans.

The National Loan Guarantee Scheme (NLGS) will provide loans with an interest rate one percentage point lower than loans available elsewhere. However, the loans will only be available to companies with an annual turnover of £50 million or less.

The loans can be offered at this discounted rate because they are guaranteed by the Government - meaning they will cover the losses from any businesses who fail to repay a loan provided under the scheme.

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

There have been concerns raised by experts in recent months that credit is too hard to come by for some small and medium-sized businesses, making it difficult for them to compete with larger firms.

John Longworth, director general of the British Chambers of Commerce, said: "The current economic challenges mean that the government must look at new and innovative ways of providing credit to viable firms.

"While credit easing is a step in the right direction, it is not a panacea for all the problems faced by businesses trying to access finance.

"The National Loan Guarantee Scheme will make some loans more affordable. But it will not help the smaller, younger, and high-growth firms that have trouble getting credit in the first place."

Funds for the scheme will be released gradually, with an initial £5 billion being made available.

Image © Flickr / altogetherfool CC 2.0

Tags: loans, National Loan Guarantee Scheme, George Osborne, business, loan, credit, business loans, loans for business, small business, SME

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.