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Cameron calls for loans boost to help small firms
Joe Murphy, Political Editor28 Nov 2008
DAVID Cameron today called for a major expansion of the scheme to get banks lending to small businesses again.
He called for a National Loan Guarantee Scheme to provide "billions of new loans" underwritten by the taxpayer in case of default. The idea mirrors a smaller scale proposal in the Chancellor's pre-Budget report but Mr Cameron said ministers were not going far enough.
Outlining his plans in a London speech, he said: "It is like the secured guarantees for a fee that the Bank of England has already put in place for inter-bank lending, which we supported. And most important of all, by guaranteeing credit to our businesses, it gets to the heart of the credit crunch and goes a long way to solving Britain's credit problems." Under the scheme, banks would be liable for a share of the money lost if a firm went bust and could not repay the loan. "It's important that banks take a share of the risk to prevent reckless lending," he said. "And it will be the banks not Government making the decisions about who to lend to."
But a big share of the loss would be picked up by the Government, in return for the banks paying a commercial insurance fee on each loan to help protect the taxpayer. The Federation of Small Businesses welcomed the proposal.
Reader views (4)
Great. Better than wasting it on Nu Labor bureaucracy and increased taxation!! We need the economy to get working again, ten years have been wasted here.
- Georgie, Islington, London, 01/12/2008 14:52
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Robert, it's a classic triage situation: there are businesses that don't need to borrow money; those which will fail whether or not they can borrow (in which case not lending them more does them a favour, though it may not look like it) and those which will succeed if they can borrow but will fail if not.
But from the story, I do not understand what David Cameron wants: he seems to be arguing that banks should be lending to small businesses much more freely despite the current economic climate, whilst "Under the scheme, banks would be liable for a share of the money lost if a firm went bust and could not repay the loan". Given this, you can't blame banks for being reluctant to lend.
- Tonyb, Melbourne, Australia, 01/12/2008 08:32
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So is David Cameron finally supporting the Government's package of economic measures, or isn't he? I think we need to be told
- Keith Price, Luton, England, 28/11/2008 16:37
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can someone tell me why these buisnesses havent got any money?
perhaps they are rubbish buisnesses.. and why should they get help to be rubbish.
- Robert Page, notts, 28/11/2008 16:07
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