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Author Topic: Funding for those with Small Businesses  (Read 605 times)

polaris

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Funding for those with Small Businesses
« on: January 21, 2009, 06:57:53 PM »


Dear All,

I hope that the following might be of use to someone.

Regards, Bernard

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Funding news - 15/01/2009
Big Help Announced For Struggling Small Businesses
A multi-billion pound rescue package aimed at easing the credit crunch for small to medium-sized firms has been unveiled by the Government.
Business Secretary Peter Mandelson revealed the “crucial” measures would help struggling SMEs overcome the lack of cash flow brought on by the global economic slowdown.
The proposals cover:
§   A £10 billion Working Capital Scheme designed to get banks lending again. The Government will guarantee 50% of the £20 billion set to be offered in loans to companies with a turnover of less than £500 million.
§   A £1.3 billion Enterprise Finance Guarantee Scheme offering loans between £1,000 and £1 million for smaller firms with an annual turnover of less than £25 million.
§   A £75 million Capital for Enterprise Fund (£50 million from Government, £25 million from banks) that will enable companies urgently needing a cash injection to sell debt in exchange for a stake in their business. Firms with a turnover of less than £50 million will be able to obtain equity and quasi-equity investment of between £250,000 and £2 million.   
These measures follow on from the package revealed by Chancellor Alistair Darling in his pre-budget report back in November, which included a £25 million six-month emergency loan fund that is already being delivered across England by the Regional Development Agencies.
Lord Mandelson has also appointed senior banker Mervyn Davies, the chairman of Standard Chartered, as a trade minister to help ensure the new initiatives make an impact.
Announcing the package, Lord Mandelson said SMEs were the “lifeblood” of the UK economy.
He revealed:
“It is crucial that the 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.”
Business leaders have welcomed the proposals.
David Frost, director general of the British Chambers of Commerce, said the pledge to guarantee loans was “not only sensible, but crucial”, whilst John Wright, chairman of the Federation of Small Businesses, warned that banks have “no excuses” not to start lending again.
He explained:
“The onus is now on bank branch managers to actively promote this money to its small business customers to ensure their survival and the revival of the economy.”
However, the two main opposition parties are not convinced the proposals will work.
George Osbourne, the Shadow Chancellor, said it “didn’t go far enough” and claimed the Government should have adopted the Conservatives’ proposal of a £50 billion loan guarantee scheme.
The Liberal Democrats’ Vince Cable accused the Government of “lacking the bottle to break the banks’ lending strike” and warned:
“We worry that this is another instance of the taxpayer shouldering all of the risks without any of the rewards.”
Further details about the Government’s new proposals can be found at the Business Link website (opens a new window)
 
Source: BERR, 14/01/2009
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