BRUSSELS, March 14 (Reuters) - EU competition regulators approved Britain’s 20-billion-pound guarantee scheme to back loans to small- and medium-sized firms, intended to cut their borrowing costs and boost the economy.
The National Loan Guarantee Scheme met the state aid rules for banks “because it ensures that the reduced funding costs which banks will benefit from are passed on to SMEs”, the Commission said in a statement on Wednesday.
Britain’s finance minister, Chancellor of the Exchequer George Osborne, unveiled the proposal in November last year as banks cut back on giving credit in the wake of the financial crisis.
The Commission, which acts as state aid and competition regulator in the 27-member European Union, said it had also approved a second measure, of up to 1 billion pounds, to increase credit through non-bank lenders.
The Business Finance Partnership aims in the longer term to stimulate the further development of non-bank lenders, to try to improve access to finance for smaller and medium-sized businesses.