The children's minister is encouraging early years providers to take advantage of a new loan scheme that allows them to borrow money at lower interest rates to grow their businesses, and increase the number of free places for two-year-olds.
Yesterday the Chancellor announced details of the National Loan Guarantee Scheme (NLGS) set up by the Government to help small businesses borrow money from banks at a cheaper rate.
All UK businesses with an annual turnover of less than £50m are eligible to apply for loans at participating banks, which so far include Santander, Barclays, Lloyds and RBS. Aldermore has also agreed in principle to join the scheme.
Sarah Teather said, ’The coalition Government has an ambitious but vital plan to increase the number of free early years places.
‘The early education and childcare sector is dominated by small businesses and they can now benefit from access to cheaper finance through the National Loan Guarantee Scheme.’
She added, ‘This is a tremendous opportunity for providers who want to invest in expanding and improving the quality of their provision. With increased demand created by demographic changes and by the new two year old entitlement coming into effect in September 2013, now is the time for the childcare sector to think about how they can start to expand to take advantage of the extra business.’
George Osborne said that the Government would use the UK’s credibility in financial markets to enable them to borrow money at a cheap rate.
Around £5 billion of Government guarantees on unsecured borrowing by banks will be made available in the first tranche, with a minimum allocation per bank of £100m.
The size and timing of subsequent tranches will depend on demand, but up to £20 billion of Government guarantees could be made available.
Banks will pass on the benefit that they receive from the guarantees to smaller businesses by offering cheaper loans.
Businesses that borrow through the NLGS will receive a discount of 1 percentage point compared to the interest rate that they would otherwise have received from the bank outside the scheme.
This would mean, for example, that a business with a loan of £1m would pay up to £10,000 a year less in interest.
All UK businesses with an annual turnover of less than £50m are eligible to apply for loans at participating banks, which so far include Santander, Barclays, Lloyds and RBS. Aldermore has also agreed in principle to join the scheme.
Sarah Teather said, ’The coalition Government has an ambitious but vital plan to increase the number of free early years places. ‘The early education and childcare sector is dominated by small businesses and they can now benefit from access to cheaper finance through the National Loan Guarantee Scheme.’
She added, ‘This is a tremendous opportunity for providers who want to invest in expanding and improving the quality of their provision. With increased demand created by demographic changes and by the new two year old entitlement coming into effect in September 2013, now is the time for the childcare sector to think about how they can start to expand to take advantage of the extra business.’
George Osborne said that the Government would use the UK’s credibility in financial markets to enable them to borrow money at a cheap rate.
Around £5 billion of Government guarantees on unsecured borrowing by banks will be made available in the first tranche, with a minimum allocation per bank of £100m.
The size and timing of subsequent tranches will depend on demand, but up to £20 billion of Government guarantees could be made available.
Banks will pass on the benefit that they receive from the guarantees to smaller businesses by offering cheaper loans.
Businesses that borrow through the NLGS will receive a discount of 1 percentage point compared to the interest rate that they would otherwise have received from the bank outside the scheme.
This would mean, for example, that a business with a loan of £1m would pay up to £10,000 a year less in interest.