Vince Cable has backed the extension of preferential lending to small and medium-sized enterprises (SMEs), threatening banks with penalties if they fail to provide loans to good businesses.
In a joint Green Paper with the Treasury, Cable's business department proposes extending the Enterprise Finance Guarantees (EFG) beyond March 2011 when it is due to expire. Introduced as a temporary scheme to drive additional bank lending following concerns about the availability of credit for SMEs, the EFG provides government guarantees on corporate loans. However, figures released this month suggested EFG lending had fallen 23% in the six months to March, compared with the previous six months. Today's paper, Financing a private sector recovery, says SMEs are "a vital part of the ...
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