Local Authorities To Start Offering Business Loans
We reported a few months ago about the possibility of local authorities starting to offer loans to individuals for house purchase and also to small businesses in the local area in an attempt to boost the local economy.
It now seems that several councils are planning to fill the gap which has been left by the main high street banks and start offering finance to local businesses who are unable to get the loan they require from the traditional lenders.
Leading the way in this area is Essex Council, who have issued plans to start their own bank, called the Bank of Essex, which will support businesses by offering them smaller loans of tens of thousands, rather than hundreds of thousands, which will be repayable over a short term, probably between six and eighteen months, the idea being to help businesses to survive the current economic slow down.
The leader of Essex council said “I am passionate about supporting local businesses through the down turn as they truly are the backbone of our local economy.”
Other local authorities which intend to start similar loan schemes include, Birmingham, Lambeth and Bolton, all of which intend to offer loan to businesses, but also wish to help homeowners who may be struggling with their existing loan and provide affordable loans for first time buyers. These councils have all acknowledged that they are unable to achieve their aims alone and will require help and assistance from financial experts and advisers if they are to be successful in their plans.
Meanwhile, the Council of Mortgage Lenders (CML) are looking on with interest, but seem to be playing the idea down somewhat, probably to support their own members. Sue Anderson from the CML commented on the proposals, she said “We would be surprised if it became mainstream and widespread.”
