21/03/12

New Anglia LEP launch loan scheme for smaller businesses

New Anglia Local Enterprise Partnership has welcomed  a new scheme which could enable businesses in Suffolk and Norfolk to secure funding to help grow their businesses

HM Treasury has launched the National Loan Guarantee Scheme (NLGS), which aims to help smaller businesses across the UK access cheaper finance.

The scheme will provide up to £20 billion of government guarantees on unsecured borrowing by banks, enabling businesses with up to a £50 million turnover to benefit from lower interest rates.

Around £5 billion in guarantees will be made available in the first tranche and participating banks have to pass on the entire benefit of the Government’s guarantee in the form of cheaper loans.

Participating banks will pass on the entire benefit that they receive from the guarantees to smaller businesses across the UK through cheaper loans. Businesses that take out an NLGS loan will receive a discount of 1 percentage point compared to the interest rate that they would otherwise have received from that bank outside the scheme.

Businesses that take out an NLGS loan can expect to receive a discount of 1% compared to the interest rate outside the scheme.

Andy Wood, chairman of New Anglia Local Enterprise Partnership said:

“The LEP welcomes the government's announcement of the national loan guarantee scheme.  The small and medium size businesses of East Anglia face a number of challenges in the current economic climate. 

Any move that reduces rates and widens access to credit has the potential to help - but the LEP will be monitoring the impact of the scheme closely.  It is now up to the banks to ensure affordable credit is available to those that need it - the enterprising small and medium businesses of the region.”

As the Treasury is not guaranteeing individual loans to businesses, banks retain the credit risk and their usual lending and credit parameters will apply.

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