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Will the National Loan Guarantee Scheme help contractors?

Will the National Loan Guarantee Scheme help contractors?

The National Loan Guarantee Scheme may be just the thing to help small businesses access cheaper finance and create more opportunities for umbrella company contractors.

This government initiative will help businesses with a turnover of less than £50 million. Chancellor George Osborne says that banks would be guaranteed a total of £20 billion for unsecured borrowing. The hope is that this will encourage our financial institutions to pass cheaper lending options to their customers, thereby promoting business growth.

The coalition has promised to help SMEs get access to cheaper funding. Project Merlin failed to meet its targets for small business lending and the Chancellor is now relying on this new nationwide scheme to deliver on the government’s promise.

He explained that the UK has low interest rates because of its credible deficit reduction plan and the government now wants to make sure SMEs can benefit from these low rates.

If the NLGS helps small businesses to expand, umbrella company contractors could well benefit from an increased demand for their services. SMEs are still reluctant to hire permanent staff because of the continuing economic uncertainty in the Eurozone. However, they will need to take on more people if they intend to grow and freelancers with the right skills will be able to step in and help.

The FPB has welcomed the Scheme. Phil McCabe said we badly need to see a change in bank/business relationships in this country, whereby lending decisions are made on a local basis by bank managers who actually know their customers.

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Image: No cash? by HowardLake

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