CBI Critiques UK Government's National Loan Guarantee Scheme
The Confederation of British Industry (CBI) has commented on the UK government’s National Loan Guarantee Scheme (NLGS), which should help small businesses to access cheaper finance. The scheme will provide up to £20bn of government guarantees on unsecured borrowing by banks, enabling smaller firms to borrow at a lower rate.
John Cridland, CBI director-general, said: “This £20bn initiative is a clear signal from the government that it is seeking to address aspects of access to finance for smaller businesses, including the cost of lending. The scheme, otherwise known as credit easing, should help bring down the price of loans to small businesses, but it will not solve the structural issues.
“For a longer-term solution, the government must act on recommendations in the Breedon review, which set out practical ways businesses could secure more ‘patient’ sources of funding over a longer timeframe,” he added.
On 15 February 2012 the Breedon review, an industry-led taskforce, set out a number of recommendations, including creating a Business Finance Advice Scheme, exploring ways businesses can tap the corporate bond markets and increasing the number of UK-based private placement investors through an industry initiative led by the Association of Corporate Treasurers (ACT).