At a national level the priority for government action has been to do all we can to help companies struggling to secure the finance they need – not because of any failure in their business but due to much tougher credit conditions.
There is evidence for example that lending from foreign banks to UK businesses is slowing.
Estimates suggest that up to £25 billion of lending could be withdrawn in 2009 as foreign banks retreat to their home markets.
Since the start of the year Government has introduced a range of measures to help increase liquidity and ease credit conditions for SMEs.
We established the Asset Protection Scheme, which allows participating banks to insure against losses on assets that have either lost a lot of value or for which there is no market.
In return for this, we have commitments from banks to maintain and increase lending.
Royal Bank of Scotland has committed to increase lending this year by an additional £16 billion for businesses, and Lloyds Banking Group will increase its business lending by an additional £11 billion.
And we are absolutely determined that banks do all they can to raise awareness of the real help available to businesses.
Encouragingly, more than 1,300 eligible loans worth almost £145 million are being processed through the Government’s Enterprise Finance Guarantee scheme.
Since its launch in January, registered lenders are now seeing a ten-fold increase in demand for loans.
We’re determined to work with all 26 lenders signed up to EFG to ensure frontline staff are offering it where appropriate to small companies across the country."
Picture Credit: http://www.historycooperative.org/journals/sia/32.2/images/fahlman_fig13b.jpg