Small businesses to get loans direct from government

With banks still apparently reluctant to free up credit, the government is to lend money directly to small enterprises.

Regional Development Agencies (RDAs) will be able to provide loans of up to £250,000 to small firms.

The first programme of direct lending will be run by Advantage West Midlands and has the approval of Business Secretary, Lord Mandelson.

Other RDAs are now being asked to offer small firms loans at commercial rates.

To qualify for the loans, businesses, however, must be viable; the funds cannot be used to prop up enterprises that are failing.