The government has announced a plan to help small businesses through the economic downturn. The plan will guarantee up to £20 billion of loans given to small businesses and insures banks against small companies defaulting on repayments.
The new plan will consist of a £10 billion Working Capital Scheme, which will help the bank lend to businesses and the government will guarantee 50% of £20bn for short term loans to businesses that have an annual turnover of up to £500 million.
In addition to the Working Capital Scheme, a further £1.3 billion will be made available through an Enterprise Guarantee Scheme for bank loans to businesses with a turnover of up to £25 million.
The government will also be setting up a £75 million Capital for Enterprise Fund, which will aid companies with large debts that have failed to secure other forms of finance.
There are concerns that the new £20 billion plan will not be enough to persuade banks to loan to small businesses, with the Conservatives lobbying for ministers to raise it to £50 billion.
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