Mayor offers financial relief for capital’s small businesses

The Mayor of London, Boris Johnson, today launched a £3 million loan fund, which will help support small and medium businesses that are struggling to secure finance during the recession.

The fund, part of the Mayor’s Economic Recovery Action Plan, is designed to bridge the funding gap being experienced by many small companies who have viable business plans but are failing to access funds from traditional source such as banks. It is fully focused on helping businesses retain jobs and support job creation in the capital.

The Mayor recognises that during the recession London’s business community needs additional support. Through the London Development Agency (LDA), who has developed the Fund, London’s small to medium companies now have an extra funding option that will help ease the effects of the recession and allow them to emerge from it in a stronger position. The Fund is designed as a ’last resort’ for companies and it is expected that potential applicants will have exhausted all mainstream sources of finance as well as having detailed business plans.

The Mayor said:

“I am doing everything in my power to help the capital’s small and medium sized companies during these tough times. It is vital that we continue to do all we can to protect jobs, upskill our staff and look ahead so that London as a whole emerges from the recession in a strong position, with our renowned image intact. This new Fund will be a welcome relief for many businesses allowing them to expand and grow and continue their vital contribution to the London economy.”

London Development Agency Chief Executive, Peter Rogers, said:

“As London’s strategic economic organisation, we know that many of London’s businesses are facing difficult times. This new loan fund – part of the Mayor’s Economic Recovery Action Plan – will help firms get access to funds that could make all the difference to their success.”

The new Fund will provide established businesses with loans of up to £50,000 for up to five years, repayable on a fixed interest rate.

Recent reports from the Bank of England have indicated that there has been an increase in credit tightening due to the downturn in the economy. As a result banks are being more cautious in providing loans and small to medium businesses, which would have secured finance in the past, are now not able to do so. The new Loan Fund will provide loans at highly competitive rates for these London businesses.

The Mayor made the announcement as he visited Baker Street store, Pretty Pregnant, which expanded its business, opening new shops with the support of an LDA-backed loan.

Evelyne Callens of Pretty Pregnant said:

“When we needed the funds to expand, the LDA’s loan scheme allowed us to borrow the money we needed to secure the new shops we wanted. I am sure other small firms will find the new scheme can provide a welcome boost to their businesses.”

Two London businesses have already successfully applied for loans from the new Fund.

Faisal Haque of Wrap It Up in Bishopsgate said:

“We are a small sandwich business looking to grow. We are delighted to have the chance to borrow the money we need at rates that are guaranteed. This will allow us to set up a new branch and increase our sales.”

Rob Gribbin of hi-tech ticketing agency Clubtickets in Hackney said:

“Without this loan from the LDA’s new fund, we would find it hard to get the money we need to expand. We will now be able to plan our growth and build our business.”