Jeremy Hunt is to extend a key government lending programme for another two years following pleas from Britain’s army of small businesses.
Sky News has learnt that the chancellor will announce in his budget on Wednesday that the recovery loan scheme, which was reintroduced in the summer of 2022, is to be extended until 2026.
Sources said that Treasury officials had heeded calls from business groups that the expiry of the existing scheme in June would represent a cliff-edge for smaller companies in need of loan guarantees.
Kemi Badenoch, the business secretary, is understood to have urged the chancellor to back the RLS’s continued operation.
Under the scheme, the government guarantees 70% of loans of up to £2m to companies which have a turnover of less than £45m.
Its launch followed massive state intervention in the business lending market during the COVID pandemic, with a series of loan schemes aimed at companies of all sizes.
In its submission to the Treasury ahead of the budget, the Federation of Small Businesses said: “The extension of the recovery loan scheme in 2022 was crucial in helping small firms invest and grow.
“It should now be extended beyond its current end date, in July 2024.
“It is performing well and an important feature of the UK’s funding ecosystem and brings many benefits in the case of economic slowdown.”
The Treasury declined to comment, while the Department for Business and Trade did not respond to enquiries.