It has been suggested by recent figures that the government’s flagship small business lending scheme, The National Loan Guarantee Scheme, has failed to bring about any significant reduction in the cost of borrowing for SMEs.
The scheme which was launched ahead of George Osborne’s March Budget, was hailed by the Chancellor as a means “to help small businesses get access to lower interest rates” by using the “credibility” of the government’s balance sheet.
However, the latest figures have revealed that interest rates on business loans worth less than £1 million fell only 0.08 percent, from 3.79 percent to 3.71 percent, during April, the first month of the scheme’s introduction.
It has also been suggested that interest rates on these loans were actually higher than the 3.62 percent seen a year earlier.
One economist has said, following the latest figures: “The National Loan Guarantee Scheme has not yet had the hoped-for impact on borrowing costs for small businesses.”
The Treasury’s scheme is supposed to underwrite up to £20 billion in lending and lower the interest rate of small business loans made under it by one percentage point. Yet three months after its launch, only nine banks have signed up, and not all have made discounted loans available.
Accountant, Jon Stocker, specialises in offering advice, support and guidance on matters involving personal tax planning, business decision-making and business start-ups.