SME financial backing announced

Finance
Written by Gary Howes
Wednesday, 14 January 2009
A plan to guarantee up to £20bn of loans to SMEs to help them survive the economic downturn has been unveiled by the government. Related Articles: RBS, Lloyds Banking: Lower lending targets please RBS, Lloyds Banking lending dominance to be reduced Lenders squeezing industry SME Credit still in short supply SMEs to benefit from RBS lending The plan will see the state insure banks against firms defaulting on loan repayments in return for a fee The Conservatives who are keen to be seen as the originators of the plan argue that the £20bn made available will not be enough to get the banks lending. The Conservatives want ministers to go further and underwrite £50bn of loans. The lack of lending that started with the onset of the credit crunch is at the heart of the current economic slowdown and the government is desperate to see credit facilities reopened. Big business lending Taxpayer guarantees worth tens of billions of pounds are also being considered by Alistair Darling to kick-start bank lending to big business The Chancellor plans to announce within days how he will try to break the logjam in wholesale financial markets that has deterred lending to business and stifled the mortgage finance market. The Telegraph adds that the Government is considering creating a "bad bank" to house the billions of pounds of toxic assets owned by Britain's major lenders. The Treasury is understood to have asked the investment bank Credit Suisse to draw up a detailed plan for the logistics of creating a bad bank, in a bid to restore confidence in the sector and to kick-start lending to consumers and businesses. Banks are cutting back on the unused credit facilities of large companies, a survey has revealed, in the latest sign of how the credit crisis is hitting UK plc. More than a third of large UK companies that do not use their full credit facilities have had them reduced by banks, the survey of 137 top businesses has revealed. Banks pulled, on average, about a third of unused banking facilities from those companies, reports the FT. Share this: digg del.ico.us Newsvine Reddit Furl technorati Facebook Comments (0) Subscribe to this comment's feed Post a comment Name (required) Email (required) (not published) Website Title By posting on this website you are agreeing to abide by our website comment policy and all posts are subject to the approval of the website editor. We will remove posts that contain offensive or threatening language, personal attacks on the writer or other posters, posts that are off topic and posts that are considered spam or specifically used to promote any commercial products or services. Any poster who repeatedly contravenes the policy will be banned from posting on the website.