Government business loan guarantees weeks behind schedule

02 March 2009

Business

The government's flagship 10bn loan guarantee scheme, the first 1bn tranche of which was due to come into effect from today, is weeks behind schedule it has emerged.

The Working Capital Scheme, which was unveiled by Lord Mandelson on 14 January, was designed to boost business lending by providing a government-backed guarantee on 50% of £20bn short-term loans to larger businesses with turnovers of up to £500m.

It was part of a raft of measures announced by the government in January, including the similar £1.3bn Enterprise Finance Guarantee for banks lending to companies with a turnover of up to £25m, which has been criticised for failing to promote lending.

According to a report in the Financial Times, the £10bn Working Capital Scheme was reliant on state aid clearance from Brussels, the request for which was only submitted by the government last week.

Officials told the FT that the commitment to the scheme becoming operational this month was intended to refer to the start of negotiations only.

Business

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