The government’s £21 billion guaranteed lending for small and medium businesses has been seen as a welcome fillip for motor retailers.
However, critics say the scheme will not improve consumers’ access to finance or restore spending on cars.
Sue Robinson, RMIF director, said: “The government’s guarantee for bank lending to small and medium businesses should enable them to survive the downturn, but more must be done to revive consumer confidence.”
The Department of Business Enterprise and Regulatory Reform (BERR) is considering allowing carmakers to access a Bank of England scheme for banks, which would allow them to raise cash to offer as finance for prospective car buyers.
The motor industry is also pushing for restoral of easy VED refunds for dealers, an important revenue stream in the past. A scrappage scheme that incentivises motorists to trade their old car for a newer one is also on its wish-list.
This week BERR put into action a £1.3 billion Enterprise Finance Guarantee Scheme for small businesses with turnover up to £25 million.
It can support loans from £1,000 to £1 million for a minimum of three months. Businesses pay 2% over commercial rates to BERR.
A £20 billion Working Capital Scheme, underwriting short-term loans to help firms with turnover up to £500 million overcome cashflow issues, will be operational from March 1.
BERR will underwrite the loans, so the banks will be more likely to make borrowing available.
Dealers should discuss the opportunity with their bank.