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Government to guarantee bank loans to retailers

Published: 14 January 2009
The Government has today unveiled measures designed to help small and medium sized business beat the credit crunch.
Government to guarantee bank loans to retailers
Business Secretary Lord Mandelson has revealed a support package to address cash flow, credit and investment needs of businesses.

The scheme means the Government, for a fee, will guarantee loans to the value of £20bn - a plan it hopes will give banks the confidence to lend again.

The measures include:

· £10bn working capital scheme, securing up to £20bn of short term bank lending to companies with a turnover of up to £500m
· enterprise finance guarantee scheme, securing up to £1.3bn of 
additional bank loans to small firms with a turnover of up to £25m
· £75m Capital for Enterprise Fund (£50m from Government augmented by £25m from the banks) to invest in small businesses needing equity

Lord Mandelson said: "We know 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."

However, the opposition Conservative party has questioned whether the money will be sufficient to kick-start the banks saying a figure nearer £50bn is needed.

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