Calls for Finance Wales to Lower Interest Rates for Struggling Firms; Shadow Minister Says Loans Should Be More Accessible
Byline: Aled Blake Business Correspondent
FINANCE WALES has been urged to seek ways to make its loans cheaper for businesses struggling to access finance as the credit crisis continues its grip.
The body, a subsidiary of the Welsh Assembly Government, was established to provide commercial funding to small and medium sized businesses in Wales through loans and equity investments.
Finance Wales yesterday said it provided 110 commercial loans to businesses in Wales in 2008.
The interest rates charged on those loans are calculated in accordance with interest rate regulations established by the European Commission.
But those rates have come under fire from business for being too high, and David Melding, the Shadow Economy Minister, said the Assembly Government and Finance Wales should lobby the EC on those rates, given the economic circumstances.
Finance Wales would not comment on whether it had asked the commission to lower its loan rates and a spokesman said yesterday: "The rate change is statutory every six months, although the European Commission changed it again in December."
Mr Melding described the economic climate as "exceptionally difficult" and said Finance Wales funding should be made more accessible to businesses during this recession.
He said: "These regulations were drawn up for an economy that was growing, but we are not in that situation. We are moving from a system where we are looking at providing extra opportunities for business."
Mr Melding argued that businesses with innovative ideas that might need finance from banks are finding it difficult to access loans from high street banks, and Finance Wales should be there to help those companies - given its position as a Government body established to help Welsh business.
He added: "Sources of funding for innovation and entrepreneurship are vital, when the commercial route is not available Finance Wales should be there to step in. …