National Loan Guarantee Scheme

Chancellor George Osborne has announced that he will be launching a new National Loan Guarantee Scheme with funds expected to be available early in 2012.

Under the scheme, the government will initially back loans to small businesses to the tune of £20bn but the figure could rise to around £40bn. The Chancellor has made it clear that the Government will not itself actually be providing this money directly to small businesses but through underwriting.

The Chancellor commented "these are guarantees, we are not borrowing this money, we are underwriting the loans that are being made."

The objective is to stimulate small businesses and ease their cash flow.