Businesses receive govt aid
Wednesday, 14 January 2009 12:00 AM
By Alex Stevenson
Peter Mandelson has unveiled the government's measures to help businesses struggling with their finances through the recession.
Firms suffering with short-term cash flow problems and those with difficulties getting both short-term credit and longer-term investment are to be assisted by the government's proposals.
A working capital scheme will secure up to £20 billion of short-term bank lending to companies with a turnover of up to £500 million, with the Department of Business, Enterprise and Regulatory Reform guaranteeing 50 per cent of this lending.
Additional bank loans worth up to £1.3 billion will be available for small firms with a turnover of up to £25 million under the enterprise finance guarantee scheme. The government will guarantee three-quarters of these loans and will be available through high-street banks.
Finally longer-term investment will be made available through the capital for enterprise fund. The government will provide £50 million and banks £25 million for smaller businesses who need equity for investment.
"UK businesses are the backbone of the UK economy so it is vital the government acts now," business secretary Lord Mandelson said at the launch of the package this morning.
"We are absolutely determined to do everything we can to help companies through this global downturn."
The Conservatives accused the government of stealing their own scheme for. Shadow business secretary Alan Duncan said: "While the government has been grandstanding and designing publicity stunts, businesses have been crying out for the kind of big, bold and simple help that we have been proposing for months."
The government's announcements follow on from commitments made during last autumn's Pre-Budget Report.
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