Financial Help for Businesses

15th January 2009

Categories: What's New

Government pledge 'Real Help' for Business

The government has unveiled a £22bn package of support to help businesses across the North East and wider UK through the global credit crisis.

Business Secretary Lord Mandelson has launched Real Help for Businesses Now to address the cash flow, credit and investment needs of small and medium businesses.

He said: ““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 Real Help Package

Real Help for Businesses Now can be accessed via Business Link and includes:

• Enterprise Finance Guarantee Scheme – aims to help smaller, credit-worthy companies which might otherwise fail to access the finance they need for working capital or investment finance due to the current tight lending conditions. The Government will provide £1bn of guarantees to support £1.3bn of bank lending to smaller firms with an annual turnover of up to £25m, and which are looking for loans of up to £1m for a period of up to 10 years. The guarantee, available through high street banks, will apply to loans and can also be used to convert existing overdrafts into loans to enable businesses to free up their current overdraft facilities to meet working capital demands.
• Working Capital Scheme – is a direct response to the constraint on bank credit available for lending to ordinary-risk businesses with a turnover of up to £500m a year. The Government will provide banks with guarantees covering 50% of the risk on existing and new working capital portfolios worth up to £20bn. The guarantee will secure up to £20bn of working capital credit lines for companies – ensuring they are safe from reduction or withdrawal. In addition, the guarantee will free up capital which the banks must use for new lending as a condition of this scheme. This is lending that would otherwise not have been provided.
• Capital for Enterprise Fund – will 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 this new £75m fund. Banks are also contributing to it. The fund, to be managed externally, will provide long term capital to businesses which have exhausted traditional forms of finance. Companies can then use this capital to invest in and grow their business.

How to find more information

In order to help businesses identify their financial needs, the Government is launching a new “one stop shop” easy-to-use web portal. North East businesses can find out about this scheme via www.businesslink.gov.uk/realhelp/finance or by calling 0845 600 9 006.

The Enterprise Finance Guarantee is available through the high street banks from today.

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