Government support packages for SMEs

On 14th January the Government announced a package of support for small and medium businesses to help them through the current economic climate. The package includes:

• Enterprise Finance Guarantee Scheme
• Working Capital Scheme
• Capital for Enterprise Fund

Enterprise Finance Guarantee Scheme

This scheme is the successor to the Small Firms Loan Guarantee Scheme. The government will guarantee up to 75% of individual bank loans for companies with a turnover of up to £25m. Loans can be up to £1m for a period of up to 10 years. A premium is payable to BERR for the guarantee facility. Lending decisions will continue to be made by the bank supplying the loan.

Working Capital Scheme

Under this scheme the Government will provide guarantees of up to 50% of bank lending relating to businesses with a turnover of up to £500m. Banks will submit a portfolio of loans and a fee will be charged by BERR based on the risk ratings of the portfolio.

Capital for Enterprise Fund

This scheme is aimed at companies who have viable businesses and growth potential but with high debt levels and who have exhausted more traditional forms of finance. The fund, which will be managed externally, will enable companies to sell debt of between £250,000 and £2m to the fund in exchange for equity. The fund will provide equity and quasi-equity for companies with turnover up to 50 million euros and less than 250 employees.

More details can be found at: http://www.businesslink.gov.uk/realhelp/finance