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Business secretary Lord Mandelson today said the government will guarantee as much as £20bn of credit to help keep medium-sized companies afloat during the recession.

Business secretary Lord Mandelson today said the government will guarantee as much as £20bn of credit to help keep medium-sized companies afloat during the recession.

The support package is the government’s latest effort to mitigate the effects of the global credit crisis and builds on the £1bn Small Business Finance Scheme outlined in November’s Pre Budget Report.

Under new proposals, the government will open a £1bn fund that banks will be able to access in order to guarantee loans for small firms with a turnover of up to £25m.

A separate £10bn Working Capital Scheme will secure up to £20bn of short term bank lending to companies with a turnover of £500m, in addition to a £75m Capital for Enterprise Fund to aid firms that need equity.

The announcement follows calls of support from leading UK companies, including Jaguar Land Rover (JLR) and JCB, which urged the government to increase spending and make funds available after a wave of job cuts throughout the industry.

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