Justin Tomlinson MP speaks at a Barclays Business Event
Justin Tomlinson MP today welcomed the announcement by Chancellor George Osborne of a new Government backed scheme to help small businesses access low cost finance.
The National Loan Guarantee Scheme (NLGS), will help smaller businesses across the UK (with an annual group turnover of up to £50 million) access cheaper finance.
The Government is using the UK’s budget credibility in financial markets to provide up to £20 billion of government guarantees on unsecured borrowing by banks, enabling them to borrow at a cheaper rate. Around £5 billion in guarantees will be made available in the first tranche.
Participating banks will pass on the entire benefit that they receive from the guarantees to smaller businesses across the UK through cheaper loans. Businesses that take out an NLGS loan will receive a discount of 1 percentage point compared to the interest rate that they would otherwise have received from that bank outside the scheme.
Justin Tomlinson MP said "This is fantatsic news for small businesses struggling to access affordable loans. As a former small business owner myself, I know how vital access to low cost loans can be. This is the Government targetting support to the powerhouse of our economy, the small businesses whose innovation and expansion will drive our local and national economies forward."
The Chancellor, George Osborne, said: “The Government promised to help small businesses get access to lower interest rates. Today, we deliver on that promise with a nationwide scheme. It’s only because we’ve earned credibility with our deficit reduction plan that we have low interest rates, and it’s only because of this scheme that we can pass the benefits of those low rates onto businesses.”
The Government is not guaranteeing individual loans to businesses and thus not taking on the credit risk of loans made under the scheme. The banks retain the credit risk and therefore their usual lending and credit parameters will apply. So far, Barclays, Santander, Lloyds and RBS have signed up.