Chancellor of the Exchequer George Osborne plans to announce the government will guarantee bank loans to smaller businesses, lowering the interest rates on the loans, according to a BBC report that cited Osborne's comments on the "Andrew Marr Show."
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The program will initially be for 20 billion pounds ($30.9 billion) of loans, but it could be doubled to 40 billion pounds ($61.8 billion), Osborne said."The government will underwrite the loans the banks make to small businesses in order to cut the interest rates the small businesses pay," he was quoted saying. "These are guarantees. We are not borrowing this money; we are underwriting the loans that are being made".Osborne also will propose that the government take a stake in an investment fund with private investors, the report said. This fund would provide loans to medium-sized companies. And in a third plan, the government will encourage companies to sell bonds to the market instead of seeking loans.Also appearing on the "Andrew Marr Show," shadow chancellor Ed Balls, who represents the Labour opposition on economic issues, said the idea of credit easing was a good one, but he wanted to see the details of the plan."If there is a credit easing plan, that will be a good thing," he was quoted saying. "It should have been done earlier ... We will look at the details, but I think it is similar to the small firms guarantee scheme which has been around for years."
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