Details of new Government SME Finance Scheme revealed

The Treasury's new small business finance scheme, unveiled in Monday's pre-budget report, is to be 75% guaranteed by the government and 25% by the banks and will come into force no later than next February

The measure was one of several measures in the speech which focused on assisting small businesses through the financial crisis.

Speaking in a rowdy House of Commons, Darling said through the temporary scheme entrepreneurs will be able to borrow between £1,000 and £1m "at more flexible terms than before". He added that the initiative is aimed at helping "SMEs experiencing short-term cash flow problems get the funding they need".

Little detail was revealed in the speech or the press notices accompanying it but in a exclusive interview with BusinessZone.co.uk, Phil Orford, chief executive of the Forum of Private Business, said the finance will be in the form of guarantees provided by the government unwriting funding to small businesses.

"It literally is a work in progress, but what I can tell you is that we're hoping that it will be in place by January or February at the latest," he said.

"It will be in the form of effectively shared risk between the banks and the government. But I'd go on to emphasise that it's different to the Small Firms Loan Guarantee scheme."

Orford added that the introduction of the scheme represents recognition from the government that small businesses need immediate "liquidity and cashflow in the first two quarters of next year". He concluded: "The fact that they've recognised that and are making it available to small businesses has to be welcomed."




Back to News