19/12/2008 - Government `to act as lending bank`
Firms struggling to survive the recession may receive loans directly from the Government in a move to avoid the worst effects of the credit crunch.
Small businesses taking out a bank loan will be able to request `matching funding` from the Government, which will effectively be acting as a bank itself.
But it is understood that, in practice, the Government is likely to provide more than half the funds firms need, with ministers expecting the banks to come up with no more than 25%.
Officials at the Department for Business and Enterprise said Leader of the House Harriet Harman referred to the scheme when she stood in for Gordon Brown at Prime Minister's Questions, but was unable to confirm details.
The move appears to reflect continuing frustration that businesses are still finding it difficult to get the credit they need, despite the Government's £37 billion bail-out of the banks.
The proposed new scheme, which has still to be finalised, would enable the Government to get round the problem by cutting out the banks and providing firms with the credit directly.
Copyright © Press Association 2008
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