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Government announces 'real help' for business loans

14 January 2009 / by Rebecca Sargent
The Government has today announced measures that could guarantee up to £20billion of bank loans to small and medium sized businesses.

As more and more businesses succumb to the recession, the Government has announced its Real Help for Business plan, which it hopes will ease the cash flow problems being felt by small-to-medium businesses.

As the state of the UK's economy worsens and thousands of jobs a day are lost, the Government has come under increasing pressure to produce measures that will protect the nation's workers.

The measures set out in the plan include a £10billion Working Capital Scheme, which will effectively underwrite loans given to small and medium sized businesses in attempts to encourage the banks to lend.

The Government will also guarantee up to £1million in loans for medium risk companies with a turn over of up to £25million. In addition, the Government will offer to invest in viable companies which have high levels of debt through a newly created £75million Capital for Enterprise Fund.

Commenting on the measures, Business Secretary Lord Mandelson said: "UK companies are the lifeblood of the economy and it is crucial that Government acts now to provide real help to support them through the downturn and see them emerge stronger on the other side.

"We know that some companies are struggling to secure the finance they need, not because of any failure in their business but due to the tougher credit conditions.

"That is why we have designed a package of measures addressing different forms of credit and providing real help for businesses."

The announcement by the Government follows the Conservatives' proposal to provide business loan guarantees to the tune of £50billion.

According to figures from the Conservatives, almost 10 businesses a day are going under because of the credit crunch, statistics that the Government hopes to reduce with today's plans.

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