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EC approves two UK measures designed to facilitate SME access to finance

By  |  March 14, 2012

The European Commission has approved the U.K.’s National Loan Guarantee Scheme and the Business Finance Partnership as in line with crisis State aid rules for banks. Both measures are designed to facilitate small and medium-sized enterprise (SME) access to finance.

The purpose of the National Loan Guarantee Scheme is to reduce, until June 30, the cost of financing for SMEs that rely predominantly on banks. The UK will make available to banks government guarantees of up to £20 billion for the issuance of unsecured debt. The reduced funding costs that banks benefit from are then passed on to SMEs in the form of new loans to SMEs at reduced interest rates.

The Business Finance Partnership will increase the credit supply to SMEs through non-bank lending. Investments will be made on equal terms with that of private lenders. The Partnership will be managed by fund managers chosen through an open tender.

Full content: EC Press Release

 

Related content: The State Aid Action Plan: A Bold Move or a Timid Step in the Right Direction? (Frederic Jenny, ESSEC Business School)