UK's Cameron pledges to guarantee business loans by private lenders

British Prime Minister David Cameron said on Tuesday he would use the government's balance sheet to guarantee business loans by private lenders if he wins the May 7 general election.

A new Conservative government would launch a new financing scheme for businesses -- which have long complained about a lack of credit from banks -- called "Help to Grow," he told business leaders in a speech.

"Our ambition is to help 500 of our fastest-growing firms annually - giving entrepreneursthe access to the kind of finance their German equivalent would get," he said, adding that British businesses were estimated to need an extra one billion pounds a year in the future.

"We will plug this billion-pound gap by using the government's balance sheet to guarantee loans by private lenders, or by co-investing public money alongside private money," Cameron said.

In 2012, the government first announced the creation of a British Business Bank to channel credit to lenders which could then be passed on to small businesses.

Cameron said that to test the best model for the Help to Grow scheme, the business bank would start a pilot scheme at the time of next month's annual budget with at least 100 million pounds of new lending.

"This will allow us to get the best possible programme up and running if a Conservative government is formed after the election, " he added. (Reporting by Kylie MacLellan; editing by Stephen Addison, Guy Faulconbridge and William Schomberg)

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