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The £40 billion credit easing scheme detailed by George Osborne yesterday in his autumn statement has received a qualified welcome from the small business community.

Business leaders and business bodies have praised the National Loan Guarantee Scheme, which has been referred to as credit easing, but feel more work needs to be done by the government and the banks for it to really help small companies.

The chancellor says an initial £20 billion will be made available in the next two years through the scheme, but more than double that amount could be available in the future.

Reacting to the autumn statement, the Federation of Small Businesses (FSB) welcomed the credit easing scheme, but raised concerns that guaranteeing the loan books of existing high street banks may serve to reinforce their stranglehold on the market.

National chairman of the FSB John Walker comments, ‘The key now is for the government to be consistent, and set to the task of translating these policy intentions into tangible actions on the ground.’

Head of entrepreneurial business at Deloitte, Tony Cohen, echoes Walker’s sentiment that the government has work to do in regards to the implementation of the scheme. He says, ‘There are several issues that still need to be addressed regarding the implementation of the credit easing measures, including how complex it will be for businesses to access and the hurdles involved to do so.’

Gary Stewart, director and founder of IT services company Xceed, acknowledges the scheme will go a long way to support SME growth but is also concerned about obstacles businesses would have to overcome to secure the credit. 

Stewart remarks, ‘Underwriting £40 billion worth of loans is all well and good but a process needs to be in place to ensure that SMEs can get credit quickly, without running a bureaucratic gauntlet to secure the funds.’

British Chambers of Commerce director general John Longworth agrees speed is of the essence. He says, ‘Credit easing measures must be implemented quickly. As the key link between the scheme and local business, the banks must swiftly regain the confidence of smaller firms by ensuring that viable companies are encouraged to take up the new source of credit on offer.’

The Institute of Chartered Accountants in England and Wales’ head of enterprise Chris Lewis also lays the onus on the banks. He comments, ‘For it to work, banks need to take a more enlightened view and lend for growth to support businesses, especially start-ups and exporters.’

Funding for the National Loan Guarantee Scheme has been made available by reducing the Bank of England’s asset purchase facility by £40 billion. The facility was awarded by the previous Labour government to enable the central bank to buy business loans.

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