§ Mr. Spearing
asked the Secretary of State for Industry what extensions have been made in the loan arrangements for small firms from the European Investment Bank, and, in respect of the loans already made, if he will state the effective rate of interest, taking into account regional development grants and the equivalent rate of interest payable on similar loans from the National Enterprise Board.
§ Mr. Les Huckfield
The scheme introduced on 1st January 1978 has recently been extended until 31st December 1979. An additional facility of £30 million has been negotiated with the European Investment Bank. The minimum level of investment has been lowered and we are now able to arrange as agents of the Bank loan from £17,000 to £2.5 million for small and medium-sized companies. Loans already made under this scheme are at an interest rate of 7½ per cent.710W per annum—plus a 1 per cent. charge for exchange risk cover. This interest rate reflects the cost of the funds to the Bank plus its small charge. They are not subsidised by the Bank.
The provision of regional development grants does not affect the interest rates of loans from the European Investment Bank or National Enterprise Board. The NEB is required, when lending to its companies, to charge a rate of interest not less than that paid by commercial companies of the highest standing when raising finance.