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Cable reveals business lending plans

Date Added: 12/11/2012  

Vince Cable has announced new plans being considered by the government to boost the business lending situation in the UK.

The Liberal Democrat MP stated an agency for business lending is being planned, which he explained would package loans into various types of bonds.

Speaking to the Daily Telegraph, the business minister stated that this would be backed by a state guarantee, which may bring a new source of money into the UK's small to medium-sized enterprises debt market.

The plan being considered by the coalition government would involve securitisation, which is linked with the kind of financial engineering that led to the worldwide economic crisis.

"An agency is part of the current thinking. We'd need to think it through very carefully and decide exactly what role government guarantees and financial support would play," said Mr Cable, who admitted the Conservative-Liberal Democrat alliance is going to have to be "very careful" in order to avoid the scheme being associated with securitisation.

He added: "A new version of securitisation does have a future. Various attempts have been made to relaunch it since the financial crisis and none have quite worked."

The Liberal Democrat MP explained this is one of the ways to improve the business lending situation for small firms in the UK, which may mean fewer organisations have to take company debt advice in order to avoid being served with a winding up petition.

Mr Cable also provided more details on the government's plans for a new business bank, noting the loans are going to be targeted at medium-sized firms that are looking to borrow money over a period of around five years.

Earlier in the month, it was announced by HSBC that it has increased business lending over the course of the year so far, with data released by the bank showing that it provided £22.7 billion of gross new lending to UK businesses during the first nine months of 2012, which is a rise of five per cent on the same period in 2011.

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Posted by Julie Cutts

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