Significant reforms to small business finance have been announced by the government.
The centrepiece of the plans is an expansion of the (BBB) Growth Guarantee Scheme (GGS) which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million.
The scheme will scale up to facilitate an additional £2 billion of SME lending per year by 2028/29. This will bring the total SME lending supported through the scheme to £3.35 billion per year, more than double the current £1.35 billion.
The maximum term length of a loan is also increasing from six to ten years for loans of up to £1.1 million.
In addition, the maximum size of businesses that are eligible for a loan under the scheme is rising from £45 million in annual turnover to £54 million.
The BBB estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150 per cent increase on the 8,000 currently being supported, bringing the total to 20,000.
Paul Hornby, Managing Director of JF Hornby & Co said: “It is encouraging to see the government respond to business feedback with a package that acknowledges the real-world funding challenges facing firms. The next step is making sure the measures are straightforward, accessible and capable of attracting further private sector investment.
“Done properly, these reforms can give more SMEs the confidence and backing they need to grow, compete internationally and embrace new technologies, helping to drive productivity, regional prosperity and long-term economic success.”
