Published: 14th January 2009
Summary
The Prime Minister has hailed a Government package to help meet the cash flow, credit and investment needs of small and medium-sized businesses.
Speaking to MPs in Parliament during Prime Minister’s Questions, Mr Brown said the £20 billion scheme offered “real help now to deal with specific problems”.
The support package was announced this morning by Business Secretary Peter Mandelson and consists of loan guarantees to the value of more than £20 billion as well as a new £75 million Enterprise Fund aimed at helping companies struggling to access finance for working capital and investment.
Announcing the measures, 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 Government will provide banks with guarantees covering 50 per cent of the risk on existing and new working capital portfolios, securing up to £20bn of working capital credit lines for companies and ensuring they are safe from reduction or withdrawal. The guarantee will free up capital which the banks must use for new lending as a condition of the scheme.
To help businesses raise new long-term finance, the Government will also offer to invest in viable companies which have high levels of existing debt through a new £75m Capital for Enterprise Fund. The fund will provide long term capital to businesses which have exhausted traditional forms of finance.
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