News
Real Help With Finance
(Part
of the Government’s “Real Help for Business Campaign”)
On the 14th January 2009 Peter
Mandelson launched “Real Help with Finance”, the package of
financial measures aimed at small and medium sized enterprises
(SMEs) which was first mentioned in November’s Pre Budget Report
(PBR). “Real Help with Finance” is part of the “Real Help for
Business” campaign. The £22bn package is as follows:
1. EnterpriseFinance
Guarantee
In the PBR, the Chancellor announced a £1bn Small Business Finance
Scheme. This goes live as the £1.3bn Enterprise Finance Guarantee.
The guarantee will support bank lending to businesses with a
turnover of up to £25million who are currently not able to access
the finance they need. This will enable them to secure loans of
between £1,000 and £1m through the government guarantee. The
guarantee will facilitate a total of £1.7 billion in additional
lending to SMEs and will be available in high street banks from
14th January.
2. Working Capital Scheme
Government will make available to banks guarantees of up to
£10bn to support lending of up to £20bn. This will enable the banks
to free up lines of credit to UK business. It is envisaged
that there will be an initial £1bn tranche of guarantees which will
cover loan portfolios with an aggregate value of not less than £2
billion.
The purpose of this scheme is to provide an
incentive to banks not to reduce or withdraw working capital lines
to sound, creditworthy UK companies. This scheme will guarantee
portfolios of bank loans rather than individual loans. The
guarantees will release capital held by the banks against the
portfolios on which the Government assumes risk. The Government
will seek a commitment from the banks that they will re-deploy that
capital to support new lending to other UK business borrowers.
In the PBR, the Chancellor announced a
guarantee scheme to support a £1bn facility for smaller exporters
to access short term working capital. This has been expanded this
to cover a wider group of businesses and lending.
3. Capital For Enterprise
Fund
In the PBR, the Chancellor announced a £50m
fund to convert businesses’ debt into equity. Government is
announcing that this Capital for Enterprise Fund will provide £75
million of equity, made up £50m of Government funds and £25 million
from high street banks. This will invest in businesses who have
exhausted traditional sources of finance but are viable in the
longer-term.
Please note: Some details are still being finalised by BERR
Businesses will be able to access
information on this support and undertake an initial diagnosis of
eligibility at www.businesslink.gov.uk/realhelp/finance
or by calling Business Link on 0845 600 9 006.
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