Small businesses may be in line for a £20bn loans boost, if governmental plans go ahead.
A new loans guarantee scheme, which could help small businesses survive the recession, is thought likely to be announced tomorrow.
Presently, a lack of credit means that businesses are finding it difficult to secure bank funding and even to renew existing loans. The new scheme would encourage banks to lend to businesses by guaranteeing small business loans, in return for a fee.
Research from the Forum of Private Business (FPB) shows that in the last quarter of 2008 33% of small businesses sought finance. Around 47% were either partially or completely rejected by UK lenders.
Some 12% claimed that difficulties in accessing finance were acting as a barrier to developing their businesses.
Phil Orford, chief executive of the FPB said: “The FPB’s ongoing research, which also includes regular, real-time data provided by our economic downturn member panel, shows that UK lenders are still not providing sufficient funding for small business.
“We are calling for additional measures to improve the availability of loans and overdraft and for the delivery of the promised £1bn in small business funding.”
The Conservatives have suggested that the proposed scheme – which is an extension of the loan guarantee scheme announced in the last pre-Budget report – should guarantee up to £50bn in small business loans.
© Crimson Business Ltd, 2009