Lord Mandelson will shortly unveil plans to guarantee up to 80% of loans to small businesses as part of a multi billion pound package to boost the economy but nearly 90% of small business in Brighton & Hove may not qualify.
The government claims to want to support small as well as large companies but there is a distinct possibility that their definition of “small” will be businesses with between 50 and 250 employees and a turnover of less than £50m. That would exclude nearly nine tenths of Brighton companies. Indeed 87% of Brighton businesses employ fewer than 10 people and we only have six in the whole city that employ more than a thousand.
In the week when Nissan announced plans to axe 5,000 jobs in Sunderland, the move is being made in an attempt to get banks to lend to businesses and prevent large-scale unemployment which probably explains why small time employers may not be eligible.
The details of the support package are expected to be announced this week.
Meanwhile the bank borrowing picture is not clear cut. While there is considerable anecdotal evidence of banks being reluctant to lend to businesses the Economic Partnership has had a number of conversations with senior high street bank directors and regional managers who insist that they are still committed to supporting businesses but their customers are reluctant to borrow in the current climate.
It may well be the case that those businesses that want to borrow are too risky for the banks to accommodate and those businesses that the banks would like to do business with simply don’t want to do business until the recession is over.
Read related items on:
Brighton & Hove Economic Partnership
Department for Business, Enterprise and Regulatory Reform