New credit-easing measures for SMEs

The government has recently published further details of a package of credit-easing measures aimed at SMEs. The package of measures relates to the National Loan Guarantee Scheme and the Business Finance Partnership.

The National Loan Guarantee Scheme

The National Loan Guarantee Scheme allows banks to apply for government guarantees that they can use to lower their cost of funding. The Scheme allows banks to raise up to £20 billion to lend to SMEs at a lower cost than they might normally achieve and, in many cases, will lead to a reduction in the cost of business loans of up to 1 percentage point. Any SME with a turnover not exceeding £50 million is eligible for the Scheme.

The Business Finance Partnership

The Business Finance Partnership is intended to provide joint public and private sector funding through managed funds lending directly to SMEs on fully commercial terms, with the aim of diversifying the sources of non-bank finance available to SMEs. Details of the BFP are somewhat sketchy. However, funds will apparently be required to invest in to lend to businesses with a turnover of up to £500 million. Although no minimum size of business has been set it appears that the BFP will be more aimed at medium-sized businesses rather than smaller ones.

If you would like to know more, please contact David Dees or Nick Crook.

Filed: 30/01/2012 12:24:41