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Credit easing scheme to 'provide £40bn in business loans'

28 Nov 2011

Chancellor George Osborne has unveiled further details on the Government’s new 'credit easing' scheme ahead of tomorrow’s Autumn Statement.

The Chancellor is proposing three such schemes in a bid to increase lending to small businesses and boost economic growth.

It is thought that up to £40bn in loans will be made available to small firms, although final details will be published alongside the Chancellor’s Statement on 29 November.

One plan will see the Government use its triple-A credit rating to underwrite banks' borrowing so they can pass on cheaper loans to firms with a turnover of less than £50m.

'The Government will underwrite the loans the banks make to small businesses in order to cut the interest rates the small businesses pay,' the Chancellor told the BBC.

'We are making available £20bn for the National Loan Guarantee Scheme; however, it sits within an envelope that could be as large as £40bn,' he added.

The Chancellor is also proposing that the Government takes a stake in an investment fund with private sector investors in a bid to provide a source of credit or loans to medium-sized companies.

Meanwhile a third scheme will encourage firms to sell bonds - or company IOUs - to the market.

The Chancellor is expected to use his Autumn Statement to introduce a range of measures that will kick-start growth in the economy.

These include a cap on regulated rail fares and a new multi-billion programme to boost infrastructure.