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European Commission - Press release

State aid: Commission approves two UK schemes easing SMEs access to credit

Brussels, 14 March 2012 - The European Commission has approved a UK measure, which aims at reducing the cost of finance for SMEs, until 30 June 2012. The Commission found the National Loan Guarantee Scheme to be in line with the crisis State aid rules for banks, because it ensures that the reduced funding costs which banks will benefit from are passed on to SMEs. At the level of SMEs, the loans will not involve state aid within the meaning of EU rules. The Commission also cleared a second measure, the Business Finance Partnership, aimed at increasing the credit supply to SMEs through non-bank lending. The Commission found that investments through the scheme will be made on equal terms with that of private lenders and that the management of the fund will be chosen through an open tender. The Commission therefore concluded that the latter scheme does not involve state aid within the meaning of EU rules.

"Facilitating SMEs access to finance is a Commission priority to overcome the crisis. The National Loan Guarantee Scheme will reduce borrowing costs for SMEs thanks to a State guarantee, without unduly distorting competition" declared Joaquín Almunia, Vice-President of the Commission in charge of competition policy.

The key objective of the National Loan Guarantee Scheme is to reduce the cost of finance for SMEs that rely predominantly on banks. To this end, the UK will make available to banks government guarantees of up to £20 billion for the issuance of unsecured debt. That funding will be directed to new loans to SMEs at reduced interest rates. The Commission found the scheme to be in line with its crisis State aid rules for banks. In particular, the fees which banks have to pay for the guarantee comply with the minimum fee requirements set out in the Annex to the 2011 Prolongation Communication (see IP/11/1488).

A second measure, the Business Finance Partnership, is equipped with up to £1 billion in funds and is aimed at increasing the supply of credit through non-bank lending channels. In the longer term it will stimulate the further development of these channels in order to address the structural financing gap of SMEs and mid-sized businesses. The Business Finance Partnership will be operated by fund managers chosen through an open tender procedure, and the UK’s co-investment in loan funds will be on equal terms with that of private sector investors. The Commission concluded that in light of the applicable terms and conditions the Business Finance Partnership does not constitute State aid.


The non-confidential version of today's decision will be made available under case number SA.34218 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. The electronic newsletter State Aid Weekly e-News lists the most recent decisions on state aid published in the Official Journal and on the website.


Antoine Colombani (+32 2 297 45 13)

Maria Madrid Pina (+32 2 295 45 30)

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