Chancellor Reveals Plans to Ease Credit Access for Small Firms
Government plans to ease small firms’ access to credit by channelling investment directly into them, have been cautiously welcomed by business groups.
Under the credit easing proposal, funding will come directly from HM Treasury – bypassing high street banks completely – but details on how the scheme will operate are still at an early stage. It is most likely that small-business loans will be packaged together and guaranteed by the Government. Further detail is expected to emerge in the Autumn Statement on 29 November.
According to HM Treasury aides, the programme could inject “billions” into small firms and would help shrink fears of a second credit crunch sparked by the euro zone debt crisis.
The plan was announced by Chancellor George Osborne at the Conservative Party conference in Manchester, as part of a package of proposals aimed at helping struggling small businesses. Many see the credit easing proposal as an acknowledgement by the Government that banks have failed to lend to small firms.
John Longworth, director general of the British Chambers of Commerce, said that the Chancellor was right to focus on small businesses and that the proposal could “deliver much needed credit to small firms”.
However, he added that “the devil will be in the detail as to how this could work.”
The Confederation of British Industry (CBI) also called for greater clarity, calling the proposals “unchartered waters”.
“The proposal for credit easing to get money directly into the hands of smaller businesses could be just what the economy needs, if it can be made to work.”
said CBI director general John Cridland