Yesterday saw the introduction of more measures by US treasury secretary Timothy Geithner to increase small business lending in the US.
Like in the UK, where the enterprise finance guarantee (EFG) scheme has been hailed by banks as the great saviour of small businesses during the recession – even if it is yet to have much of an impact – the US government has earmarked $15bn (£10.6bn) to increase liquidity and persuade banks to lend to struggling firms.
So how does the US package measure up to the EFG? Geithner’s package will cover more than 27 million businesses – that’s roughly £393 per business, while Alistair Darling’s £1.3bn scheme needs to prop up around five million businesses, which equates to £260 per business.
The US package will require banks receiving government support to submit monthly reports on how much money they have lent to small businesses to prove they are lending. While there are no such requirements here, we might see something shortly: rumblings from entrepreneurs including Theo Paphitis in last month’s ‘Panorama: Credit where it’s due’, indicate small businesses aren’t seeing the money they’ve been promised.
We like the US emphasis on accountability for banks. Yesterday, Geithner said it’s important to make the ‘extra effort to make sure good loans are getting to credit-worthy small businesses’. We look forward to that ‘extra effort’ being made over here.