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Government to underwrite 80% of small business loans

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The government is preparing to guarantee up to 80% of loans to small businesses as part of a multi-billion pound package of measures to stimulate the economy.

 

An announcement is expected in the middle of next week about the latest attempts to kick-start lending to some of the country's leading employers.

 

The details are being finalised in a frantic round of negotiations with officials at Lord Mandelson's Department of Business and Enterprise, but it is thought the business secretary wants to agree a broader package of measures than was outlined in Alistair Darling's pre-budget report.

 

The government is aiming to provide support for financing large as well as small companies. It wants to cover loans of up to £1m to businesses for up to 10 years because it is concerned that the economy will grind to a halt without a renewed flow of funds to small businesses, which claim they are being starved of cash by overly cautious banks. But it also wants to ensure that businesses both large and small have access to enough working capital to pay for their every day activities.

 

Gordon Brown, the prime minister, yesterday insisted banks should honour a commitment in a government rescue package to maintain the supply of loans to mortgage holders and small businesses at 2007 levels.

 

More:

 

Government to underwrite 80% of small business loans | Politics | The Guardian

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It looks like more of the same to me. I have a SFLGS (Small Firms Loan Guarantee Scheme) loan taken out in 2000 for ten years. The Government guarantee is 85% of the loan. While I cannot remember the upper limit for a SFLGS Loan, 1 million does ring a bell, although that may have been the upper limit for turnover. I have tried to refinance several times over the past couple of years but the SFLGS loan gets in the way every time because, according to the current rules, you cannot use a new SFLGS loan to refinance debt. And I think that is probably where the sticking point is.

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Just an update. Under the new rules for the Enterprise Finance Guarantee, the government will underwrite 75% of the loan with the bank having the option of taking personal guarantees or assets as security for the balance. The new loans MAY be used to refinance debt. This is a massive step forward but it may take the banks a bit of time to understand that this is actually taxpayers money that is being loaned out, not their own.

 

I'm currently waiting for a response from my bank.

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Crikey - I'd forgotten all about this thread.

 

Late February - response from bank - no you can't have a loan because the scheme does not allow refinancing of debt. My response - yes it does, read the rules.

 

Early March - response from bank - no you can't have a loan because the scheme cannot be applied to someone who already has a Small Firms Loan Guarantee Scheme Loan. My response - yes it can, read the rules.

 

Mid March - response from bank - we are not prepared to extend further financial assistance to your company. My response - OK, at least that is probably truthful.

 

Late March - Bank suggests that we should call in a Recovery/Insolvency practitioner. My response - get stuffed! (I actually said 'NO' but the meaning was clear).

 

Today - nothing heard from bank for over 6 months (apart from the usual raiding of the account) and we are still making ends meet.

 

Next week - another full week of work. Eggs prepared for faces in due course.

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