Autumn Statement 2011 40 Billion Business Loan Guarantees

Autumn Statement 2011 - 40 Billion Business Loan Guarantees.

The Chancellor, George Osborne, has confirmed Government support for so called “credit easing”.

In short, the Government will underwrite loan guarantees to small and medium sized businesses (SMEs) via the National Loan Guarantee Scheme.

Mr Osborne suggests that the scheme will make business borrowing up to 1% pa cheaper.

Much has been said about the lack of effectiveness of loan guarantees as businesses are reluctant to borrow and likewise banks are reluctant to lend in difficult economic times despite the guarantees.

Whether a firm succeeds or not with expansion, the loans still have to be repaid so any business owner will be careful about borrowing.  We just cannot see this benefitting small businesses of less than 10 employess but may help mid size businesses with 50+ employees access capital to expand.