Tunbridge Wells Together

News & Information for Economy, Skills and Transport

The National Package

“Real Help with Finance” – Part of the Government’s “Real Help for Business Campaign”
On the 14th January 2009 Peter Mandelson launched “Real Help with Finance”, the package of financial measures aimed at small and medium sized enterprises (SMEs) which was first mentioned in November’s Pre Budget Report (PBR). “Real Help with Finance” is part of the “Real Help for Business” campaign. The £22bn package is as follows:

1. Enterprise Finance Guarantee

In the PBR, the Chancellor announced a £1bn Small Business Finance Scheme. This goes live as the £1.3bn Enterprise Finance Guarantee. The guarantee will support bank lending to businesses with a turnover of up to £25million who are currently not able to access the finance they need. This will enable them to secure loans of between £1,000 and £1m through the government guarantee. The guarantee will facilitate a total of £1.7 billion in additional lending to SMEs and will be available in high street banks from 14th January.

2. Working Capital Scheme

Government will make available to banks guarantees of up to £10bn to support lending of up to £20bn. This will enable the banks to free up lines of credit to UK business. It is envisaged that there will be an initial £1bn tranche of guarantees which will cover loan portfolios with an aggregate value of not less than £2 billion.

The purpose of this scheme is to provide an incentive to banks not to reduce or withdraw working capital lines to sound, creditworthy UK companies. This scheme will guarantee portfolios of bank loans rather than individual loans. The guarantees will release capital held by the banks against the portfolios on which the Government assumes risk. The Government will seek a commitment from the banks that they will re-deploy that capital to support new lending to other UK business borrowers.

In the PBR, the Chancellor announced a guarantee scheme to support a £1bn facility for smaller exporters to access short term working capital. This has been expanded this to cover a wider group of businesses and lending.

Note: The Government expects to be able to approve guarantees from the end of Feb 2009.

3. Capital For Enterprise Fund

In the PBR, the Chancellor announced a £50m fund to convert businesses’ debt into equity. Government is announcing that this Capital for Enterprise Fund will provide £75 million of equity, made up £50m of Government funds and £25 million from high street banks. This will invest in businesses who have exhausted traditional sources of finance but are viable in the longer-term.

Note: This is not yet available, details are still being finalised by BERR.
Businesses will be able to access information on this support and undertake an initial diagnosis of eligibility at the Business Link website or by calling Business Link on 0845 600 9 006.

The SEEDA Fund

Bridging Mezzanine Debt Fund/Transition Loan Fund
As a direct response to business need resulting from the credit crunch, SEEDA, working with Finance South East, has established the £3m Bridging Mezzanine Debt Fund (BMDF). The BMDF makes assistance available to businesses rapidly.

Key elements of the BMDF are:-

  • Unsecured loan up to £148,000
  • Up to one year term, which can be extended on request
  • No capital repayments or interest payments until maturity
  • Rolled up interest so payment is at maturity
  • No notice to repay loan as other funding becomes available
  • No arrangement fees

These elements ensure that the fund does not compete with the commercial sector whilst also being attractive to viable businesses because of the ‘rolled up’ interest and unsecured status of the Funding.
Further information is on BMDF is available through Business Link on contact details above, or Finance South East (Telephone 01276 608510).

Further Information

For more news about training and business development in Tunbridge Wells please see our web pages on the Borough Council website

 

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