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Business: Government Assistance

Volume 496: debated on Monday 20 July 2009

To ask the Chancellor of the Exchequer how many applications have been made under the working capital scheme for small and medium-sized businesses to date. (255607)

I have been asked to reply.

The Working Capital Scheme is not available directly to businesses. The scheme enables participating banks to increase the amount of working capital they can make available to businesses.

By guaranteeing portfolios of working capital facilities, this will release regulatory capital held by the banks against these portfolios. The banks have agreed they will make commitments to re-deploy this capital in order to increase all types of lending to Small and Medium sized Enterprises (SMEs) and Mid Size Corporates above their current base line.

We have signed £1 billion of guarantees with RBS and Lloyds for portfolios of £2 billion. The financing for businesses it releases has already started from 1 March as a result of the lending agreements based on the Asset Protection Scheme and WCS. We will be allocating from the £10 billion WCS, guarantees for trade credit insurance in response to the constraint to working capital arising from withdrawal of trade credit insurance. We will also be consulting on the viability of using some of these guarantees for letters of credit and other forms of export finance which are also possible areas of constraint for working capital.