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Support for small businesses
14/01/2009
Businesses in Scotland should explore all possible means of boosting their cashflow, Enterprise Minister Jim Mather said today.
The UK Government has announced up to £22 billion of support to guarantee credit to business.
Speaking at a breakfast with small businesses in Glasgow, Mr Mather Mather said:
"We have known for some months that companies have a real and pressing problem getting the credit they desperately need. And we have seen survey evidence of the increasing cost of credit for small business - both existing and new finance - despite the deep cuts in base interest rates.
"While we have a lower unemployment rate than the rest of the UK, today's announcement by the UK Government is a step in the right direction to keep jobs. I'd urge every business which needs support to go out and ask for it.
"Successful small businesses are a source of entrepreneurship and innovation and driver of competition and job creation - vital to increasing economic growth. We are taking every action we can to support economic recovery, such as abolishing business rates for thousands of small businesses from April. Through our accelerated capital expenditure which will support 4,700 jobs and our six point economic recovery programme, we are making the right economic decisions for Scotland. And Scottish Enterprise is doing everything possible to help companies weather the downturn.
"We have been calling on the major Scottish banks to keep lending to our businesses, so I am pleased that three months after the UK Government put billions of pounds of taxpayers money into three of our main clearing banks, they are now taking action to get the banks lending to good businesses in Scotland again.
"Take up of the Enterprise Finance Guarantee will depend on demand, but today's announcement could mean £170 million available for small businesses in Scotland. SMEs should contact and discuss with their lenders at the earliest opportunity to access this support.
"And with overall support for Scottish business possibly totalling £2 billion, this is a much needed package that will be welcomed by business across Scotland."
The UK Government's Enterprise Finance Guarantee will guarantee up to £1.7 billion of bank lending for creditworthy small businesses. The Guarantee will be used to support loans or refinance existing loans to small businesses with an annual turnover of up to £25 million, providing a temporary boost to available working capital.
The Working Capital Guarantee Scheme will give banks a 50:50 risk share on finance to enable them to offset risk and free up capital for further lending. If the Guarantee is effective, the UK Government will extend support to a liability of £10 billion, providing up to £20 billion to business.
The Scottish Government's economic recovery programme builds on the steps already taken to support the Scottish economy. The programme has six elements, designed to maintain investment and development in the economy while targeting support at households and businesses:
- Reshaping capital spending plans
- Ensuring all government activity, including on planning and regulation, supports economic development
- Intensifying activity and support for tourism and Homecoming 2009
- Intensifying work around energy efficiency and fuel poverty
- Increasing advice to businesses and individuals
- Improving financial advice to vulnerable individuals
Scottish Enterprise is running its 'Now's the time to ask' campaign. Targeted at Scottish companies, the campaign asks companies to submit questions to Scottish Enterprise by posting a question on www.nowsthetimetoask.com
or calling 0800 141 2128.
Every question submitted will be answered in full with practical information on how to tackle the issue, details of appropriate events, and further resources including business guides, information and advice from Scottish Enterprise and Scottish Development International, or partner organisations like Business Gateway.
The campaign is designed to deliver a better understanding of how Scottish Enterprise can help businesses address their present concerns. Companies may want to know how to squeeze more efficiencies from current processes, find new markets, develop new products or check whether finances are being managed as effectively as they could be.