The proposals too loosen rules and allow SMEs to borrow money directly
Small businesses will be able to borrow money from City pension funds and insurance companies – rather than having to rely on banks – under plans being drawn up by Alistair Darling.
The chancellor believes Britain's banks are starving small businesses of cash, and will announce a package of measures in his autumn pre-Budget report that will see City resources channelled to expanding firms.
Under the scheme, small businesses would be able to approach City institutions which would be approved to lend by the government.
In an article in today's Observer, the chancellor says: "I want to start creating a different financial model in the future, in which small companies get funding from sources other than banks. Our goal is to make finance the servant, not the master, of the real economy."
Amid tentative signs that the worst of the recession may be over, the chancellor is concerned that a nascent recovery could be smothered if a small number of over-cautious lenders fail to back small and medium-sized businesses. According to Treasury figures, small firms receive 92% of their funding from the four largest banks."
it could be quite a radical step, and it shows that there are still ideas coming out of this government. And it just confirms that Alastair Darling is ace