Notes to editors
Enterprise Finance Guarantee (EFG)
* EFG builds on the £1bn Small Business Finance Scheme outlined in November's Pre Budget Report.
* Government guarantees 75% of the loan, with banks covering the remaining 25%.
* The guarantee will be available through Barclays, Clydesdale/Yorkshire Bank, HBOS, HSBC, Lloyds TSB, RBS/Natwest and Northern Bank. It will become available from other lenders if they wish to apply.
Working Capital Scheme (WCS)
* In the PBR, the Chancellor announced a guarantee scheme to support a £1bn facility for smaller exporters to access short term working capital. We have expanded this to cover a wider group of businesses and lending, including exporters.
* Under the Working Capital Scheme, banks will submit a portfolio of loans to businesses (lending to businesses with turnover up to £500m) to BERR. BERR will guarantee up to 50 per cent of the value of the portfolio, securing up to £20bn of bank lending.
* Banks are invited to submit their portfolio of existing and projected new or refinance loans for approval under the guarantee. We have received declarations of interest by Barclays, HSBC, Lloyds TSB and RBS. With the support of participating banks, we hope the first £1billion guarantee tranche of the scheme should be operational by 1st March.
* By guaranteeing portfolios of working capital facilities, this package will release capital held by the banks against these portfolios. The banks have agreed they will make commitments to re-deploy this capital in order to increase all types of lending above their current plans, to businesses with a turnover of less than £500m.
* Banks will pay a premium to BERR for this facility; pricing is to be agreed with the banks at the time a portfolio of loans is offered. Pricing will reflect the risk characteristics of the portfolio, to cover potential default payments.
* The Working Capital Scheme is subject to EU State Aid Clearance.
Capital for Enterprise Fund
* In the PBR, the Chancellor announced a £50m fund to convert businesses' debt into equity. Government is today announcing that this Capital for Enterprise Fund will provide £75m of equity, made up of £50m from Government funds and £25m from high street banks (Barclays, HSBC, Lloyds TSB, and RBS).
The online portal can be found at:
http://www.businesslink.gov.uk/realhelp/finance
