Scheme is being “re-adjusted”
Thousands of smaller resellers who were looking to a government loan scheme to tie them over during the recession have been walloped by a U-turn by Chancellor George Osborne.
Osbourne had devised the National Loan Guarantee Scheme to give money to directly small businesses but it has been replaced after four months.
It seems that Osbourne has now decided to give £80 billion to banks so they can help thousands of firms.
This means that the smaller struggling resellers will have to go with their caps in hand to the banks to ask for help, who may or may not charge them an arm and a leg interest.
To make matters worse, no one is actually saying that Osborne’s original scheme is being scrapped. Instead the Treasury is denying this completely but admitted it would be gradually replaced by “Funding for Lending”.
Funding for lending is supposed to help smaller businesses get loans from banks by having the government underwrite them.
But the other scheme was working well. While it is unknown how many of the smaller resellers applied for cash in the short time the scheme ran more than 16,000 loans worth £2.5 billion to businesses.
The Government insists that Funding for Lending will deliver credit easing to the economy. But it is dependant on banks passing the cheap government money on and not charging huge rates of interest because the smaller businesses are considered a bigger risk.
So far, the Federation of Small Businesses said it didn’t care what the scheme was called as long as firms get cheap loans.
According to the Evening Standard Osborne hopes the plan will stimulate growth among British companies which have struggled due to the reluctance of banks to lend to them.
However given the effectiveness of his policies so far and the fact that the economy double dipped because of them, his own career is looking shaky with some even within his own party calling for him to be ceremonially sacrificed.