Some good news for cash strapped SMEs

The Chancellor will tomorrow confirm that Barclays, Lloyds Banking Group, Santander UK, and Royal Bank of Scotland have signed up to the government's National Loan Guarantee Scheme (NLGS), which will provide cheaper lending to businesses with a turnover of up to ￡50m.

Small and medium-sized businesses will from tomorrow morning be offered loans at 1 percentage point below these banks' standard lending rates, with about ￡5bn of government-guaranteed borrowing being made available in the first tranche.

Barclays and RBS are expected to be the biggest users of the scheme to issue ￡1.5bn each of government-backed bonds to provide the cheap loans to small businesses. Lloyds is likely to provide about ￡1bn of loans and Santander less than ￡500m.