Small businesses grab £20 billion lifeline
Jan 14 2009
Small businesses fans of credit plan
Owner-managers are welcoming a government plan to underwrite up to £20 billion for businesses.
Tim Wallis, owner of IT company Content and Code, says: ‘This is a really good idea as we need to get the banks lending again. It’s a trade, not aid, solution and so exactly the right measure for the economy.
‘We have had to pay too much attention to our cashflow over the last few months. Having access to loans will enable us to continue our rapid expansion.’
Julie Simpson, managing director of Resource IT, says: ‘This is really good news for us as it means we are no longer precluded from applying for a small business loan.’
Key to the plan is the £10 billion working capital scheme, whereby the government will provide guarantees on 50 per cent of £20 billion short-term loans to businesses with a turnover of up to £500 million.
Other measures announced include a £1.3 billion fund specifically for small businesses and a capital for enterprise fund worth £75 million for SMEs in need of long-term funds.
David Frost, director general of the British Chambers of Commerce (BCC), says: ‘[The] government promise to guarantee individual loans to businesses is not only sensible, it’s crucial.’
Alan Tomlinson, partner at insolvency practitioners Tomlinsons, is sceptical: ‘Anything that can get money moving again has to be seen as a positive, although we shouldn’t get carried away.
‘How long will it take for this latest scheme to filter through – for many companies probably too long – and will it really get the banks lending again? There’s a big difference between theory and practice.’
Comment by Agatha Thomas
Tuesday 27th January 2009It's a wellcome relief for the Govt to guarantee SME loans so that they can stay in business. What is the same Govt doing to rehabilitate those SMEs that have been forced into bankruptcy in 2008? As loan parent, I remortgaged my home twice to buy an Estate Agency Franchise. I was ok for two and half years until I was forced to close the business in 2008. Now I'm in danger of losing my home. The Banks are being helped, but my bank, HSBC refused to help me when I needed their help. Now I can't find a job however hard I try. If the Govt does not address the issue of SMEs that were forced into liquidation due to the bad economy, by helping them go back to business, then that would be discouraging hard working people in this country. So, just like people who have lost their jobs are being encouraged to start their own business, those who were in business before and would like to go back running their business should be helped.
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Comment by kathleen hall
Wednesday 28th January 2009While the government's efforts should be welcomed, it seems we can't rely on the banks to help small businesses - even with the guarantee on SME loans. As things get tougher, the government needs to come up with more imaginative incentives to help our small businesses.
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