A STATES-backed loan scheme for small businesses is to be extended, to help Jersey firms cope with the economic downturn.

The Small Business Loan Guarantee Scheme, initially proposed by the Jersey Chamber of Commerce, was set up in 2007 by the Economic Development department. It is designed to help entrepreneurs or small firms who would not otherwise be able to borrow money from a bank, because they have no form of security.

Under the scheme the States agrees to act as guarantor for 75% of a business loan of between £5,000 to £250,000, for between two and ten years. In return the borrower pays the States two per cent per annum of the value of the outstanding amount of the loan.

The four banks taking part in the scheme are the four main lending banks in the Island: HSBC, Lloyds TSB, RBSI/NatWest and Barclays. Economic Development Minister Alan MacLean (pictured) says that to his knowledge six or seven loans have been arranged under the scheme since it was first set up.