UK Darling: To Launch Temporary GBP1B Small Firm Fincl Scheme

LONDON --The U.K. government will move to ease access to credit for small and medium-sized enterprises by launching a temporary GBP1 billion finance scheme, the Chancellor of the Exchequer Alistair Darling announced Monday.

"I can announce the Government is also to offer credit through a temporary Small Business Finance Scheme - this is worth another GBP1 billion to small businesses," Darling said as part of the his pre-Budget report in Parliament.

The move, which will allow SMEs to borrow on more flexible terms, is designed to help firms experiencing short-term cash flow problems.

"(The scheme) should allow small businesses to borrow sums from a thousand pounds to a million pounds at more flexible terms than before, making lending more affordable and easily accessible," Darling said.

The government has repeatedly warned that the drying up of bank credit for small business poses a major threat to the U.K. economy and job creation.

Darling also announced an additional temporary GBP1 billion support for SMEs through the Export Credit Guarantee Department, which helps U.K. companies compete in overseas markets.

"We are also going to support companies which export, through the Export Credit Guarantee Department," Darling said.

"This will mean yet another GBP1 billion of support, to help ease the financing constraint faced by firms trading in current circumstances," he added.

-By Joe Parkinson and Ainsley Thomson, Dow Jones Newswires; 44-207-842-9291; joe.parkinson@dowjones.com