April 5 2012.

A new government National Loan Guarantee Scheme (NLCS) was launched on 20 March 2012 to enable eligible businesses to access cheaper loans from participating banks.

The government is using the UK's budget credibility in financial markets to provide guarantees on up to £20 billion of unsecured borrowing by banks. This will enable participating banks to borrow at a lower rate, and these banks will pass on the entire benefit they receive to smaller businesses through cheaper loans.

This means that businesses that are granted an NLGS loan by their bank will receive a discount on their loan of one percentage point compared to the interest rate that they would otherwise have received from that bank. The scheme is open to businesses with turnovers up to £50m and applies to new term loans, hire purchase and leasing arrangements.

Participating banks include; Barclays, Bank of Scotland, Lloyds TSB, Natwest, RBS and Santander.

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