Pre-Budget Report 2008: a boost for business finance
Article Date: Nov 24 2008Chancellor Alistair Darling has announced a range of measures intended to help small and medium-sized enterprises (SMEs) access debt finance.
In his Pre-Budget Report, the Chancellor announced a £7 billion package to assist SMEs struggling to secure loans. The European Investment Bank is providing £4 billion, which will be channelled through UK banks. Darling added that seven banks had already asked for a share of this money, and that £1 billion of it would be available to companies by the end of the year.
In addition, a temporary Small Business Finance Scheme is being launched that will provide loans of between £1,000 and £1 million ‘on more flexible terms than before’, aiming to ease businesses’ short-term cash flow problems. For smaller exporters there is a new Export Credits Guarantee Scheme with government backing of £1 billion, while the existing Fixed Rate Export Finance Scheme will continue for another year.
To ensure that taxpayers’ cash reaches borrowers, Darling announced the launch of a lending panel including representatives from both businesses and banks. Lenders which accepted government bailouts must ensure SMEs’ access to finance is maintained at 2007 levels, he warned.
Other measures intended to assist SMEs to get through the downturn include more flexible tax payment procedures for struggling businesses, the deferral of a 1p corporation tax increase, and the ability to offset losses against profits made over the past three years.
Click here for a summary of key points from the 2008 Pre-Budget Report.
