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Who needs this?
My prediction that the Budget will be all hot air and no substance is borne out by this latest announcement. Ask any local business bank manager what the problem with lending to SMEs is, and interest rates is NOT it! Who in Government really thinks interest rates are the problem?
Banks still struggle to lend because most applications fail to meet their criteria. Or put another way, most SME's can't handle any (more) borrowing, whatever the interest rate. This new scheme will change nothing.
But it does make them look like they're trying, so it's a good headline in the absence of any really good news for business!
"Businesses with a turnover below £50m "
Only using the strict EU definition of 'small' companies could anyone reconcile the size of businesses referenced in the announcement.
I do wonder whether ministers and/or civil servants do it deliberately. The mainstream media parrot references to 'small' companies and the man in the street assumes it covers the smallest companies - micros with turnover below £100k or even upto £500k or £1m.
So it seems to be an annoucement helping the latter whereas in reality it only helps very large companies that happen to satisfy the technical definition of 'small'.
Mark
deposit
When cash flow has dried up there is no deposit and this is where this idea fails.
The reserves these firms had were used up first especially with micros as they would not have understood investing and borrowing while you still had some cash to assist.
I rather think that is the point, a political statement that sounds good but is practically no use.
Borrowing for the sake of borrowing (whilst a popular idea in government and banking) is not a solution to any ones problems.......The missing element is often a plan.
We really need a government that understands some of the basics of business.
Trouble is our government has as much power and use as a parish council, we now have to follow the European model of disaster.
This is overdue!
Finally.. this is something which I think will really help stimulate business and get things moving. As we all know the banks have become so reluctant to lend to people - I distinctly remember seeing Barclays defending their reputation around lending to businesses saying how they were providing more loans and credit.
It will be good to actually see this in action as often these schemes are devised but the results are dissapointing.
Just my opinions, of course!