Government urges banks to help small businesses

Peter Mandelson, will meet with banking chiefs this week, to urge them to do more to help struggling small businesses and homeowners.

The country’s newly appointed business minister will discuss measures to protect small businesses, which according to a government source; will include an extension of the export credit guarantee scheme, in order to protect firms involved in deals overseas.

The government will also urge banks to continue their promotion of the small firm loan guarantee scheme, that allows small businesses to apply for loans underwritten by the government, making it easier for firms to raise funding.

The meeting was convened by Alistair Darling after he became concerned that banks were changing loan agreements with small businesses, and then charging them for their altered financial status.

The government pumped 37 billion pounds of taxpayer’s money into three of Britain’s largest banks earlier this week, giving it an increased weight in the banking world.

Mandelson told the BBC on Monday: "There are things that we can and will do both directly as a government, but also indirectly using the banks as lenders to businesses as well. We can put in place, and we are, a framework of policy which in the round can help small and medium-sized enterprises as well as other businesses get through this period.

“Amongst those banks in which we do not have stake, Alistair Darling and I are going to talk to their chief executives and discuss with them how they use their discretion and take a rather more flexible approach during this time of hardship in order to maintain credit lines to small and medium sized enterprises.”