The credit easing scheme, which Osborne hinted could be expanded to £40bn, will underwrite an initial £20bn of bank loans to SMEs over the next two years in a move that is expected to lower the borrowing cost for businesses by 1%.
The government will make a further £1bn available through a Business Finance Partnership to invest in SMEs through non-bank channels, including funds that lend directly to mid-sized businesses.
However, the lending pledge has been met with a muted response from printers, who have questioned how accessible the money will be in light of past promises on increasing access to finance that have failed to deliver.
Tim Hill, managing director of Maidstone-based display printer Speedscreen, said he would welcome the fund as long as red tape didn’t stifle the company’s ability to benefit from it.
"If I want to benefit from this new scheme, secure a deposit and invest in new kit, it will be because I need it now, not in three years’ time," he said.
"There is no point in such a fund if the rigmarole surrounding it makes it prohibitive," agreed Tim Lance, sales director at Slough-based design X1.
The government will also extend the current small business rate relief (SBRR) holiday for a further six months to October 2012; businesses will also be able to defer 60% of the following year’s increase to be repaid equally in 2013/14 and 2014/15.
Other measures announced include the introduction of a Seed Enterprise Investment Scheme that will offer 50% income tax relief to catalyse investment in new start-ups.
Phil Orford, chief executive of the Forum of Private Business organisation, welcomed the measures, but said the government should do more to boost non-equity-based lending.
Andy Cook, managing director of UK-based manufacturer FFEI, said it was "disappointing" the chancellor did not expand upon or extend the current SME R&D tax credits.
• Credit easing scheme to underwrite initial £20bn of bank loans to SMEs over next two years
• Further £1bn available to SMEs through Business Finance Partnership
• Extension of small business rate relief holiday by six months
• Introduction of Seed Enterprise Investment Scheme to encourage investment in start-ups
• £75m to support technology-based SMEs to develop, demonstrate and commercialise new products
