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Lord Mandelson announces financial help for SMEs

A financial support package for small-to medium-sized businesses has been announced by Business Secretary Lord Mandelson.

The support is intended to help businesses, including waste and recycling, address cash flow, credit and investment needs.

Measures include:
* A £10bn Working Capital Scheme, securing up to £20bn of short term bank lending to companies with a turnover of up to £500m
* An Enterprise Finance Guarantee Scheme, securing up to £1.3bn of
additional bank loans to small firms with a turnover of up to £25m
* A £75m Capital for Enterprise Fund to invest in small businesses which need equity.

A one-stop-shop to help businesses identify which schemes could help them has been launched on the Business Link website.

Mandelson also revealed the Government is talking to trade credit insurance providers about helping companies which have had this credit reduced or withdrawn.

Mandelson said: "We know that some companies are struggling to secure the finance they need, not because of any failure in their business but due to the tougher credit conditions. That is why we have designed a package of measures addressing different forms of credit and providing real help for businesses."

Identifying the right financial package

The Working Capital Scheme will target ordinary risk businesses - with a turnover of up to £500million a year - which are struggling with bank lending constraints. Under the scheme, the Government will be guarantor for 50 per cent of working capital portfolios worth up to £20bn. As a condition of the scheme, any bank money released by the Governments guarantee must be available for new lending.

The Enterprise Finance Guarantee Scheme will help smaller credit worthy companies to access money. Guarantees worth £1bn will be provided by the Government to banks on behalf of businesses with a yearly turnover of up to £25m. This will free up £1.3bn of bank lending, which these businesses can access for loans of up to £1m over 10 years.

Businesses experiencing difficulties raising new long-term finance will find support in the Capital for Enterprise Fund. Capital worth £75m has been earmarked for investment in viable companies which have high levels of existing debt. This amount has been provided by the Government (£50m) and the banks (£25m).


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