Treasury 'delivering on promise to help UK businesses' says Osborne
Britain has launched its £20 billion “credit easing” scheme that is hoped will encourage banks to increase their lending to small and medium-sized businesses across the country.
The National Loan Guarantee Scheme (NLGS) will provide banking institutions a fiscal failsafe that protects them when lending to companies.
In turn, participating banks will lower loan rates to businesses by one per cent.
The £20 billion scheme is the latest attempt to stimulate bank lending which, in the wake of the 2008 and Eurozone credit crises, has become more risk-averse.
In the past four years, many small British firms have lamented the narrowing chances of securing bank loans for business. This is believed, in turn, to be affecting growth across the country.
Businesses with an annual turnover of less than £50 million can apply for bank loans through the credit easing scheme.
The Royal Bank of Scotland, Barclays, Santander and Lloyds have signed up to the initiative. HSBC, which has not enrolled to the scheme, said it was "unable to participate on commercially viable terms".
Lloyds bank said the NLGS may “rekindle confidence, stimulate demand and encourage investment".
Ahead of his Budget on Wednesday, Chancellor George Osborne said the government is “delivering on its promise” to help small businesses get access to lower interest rates.
From today, about £5 billion of loan guarantees are being allocated to banks.