Small businesses will receive £20 billion of government guarantees to allow them to borrow at a much lower rate, it has been announced today.
The Treasury will provide the money over a period of two years to leading high street banks, who will then use the money to pay for unsecured bank lending.
It will allow businesses a one per cent discount they would otherwise not have received had they been borrowing from a bank not taking part in the scheme.
While RBS, Barclays, Lloyds and Santander are on board, HSBC declined to take part as its large customer deposits meant participating in a credit easing scheme would lose it money.
But businesses say the scheme, while helpful in the short term, will not solve the structural issues discouraging banks from lending to small business.