In these days of economic turmoil, banks are hesitant to offer credit to small and medium enterprises (SMEs) – even healthy businesses are denied. This is a problem and is hurting the economy, says the Dutch socialist party the SP.

What to do? Establish a National Investment Bank (NIB) that offers enterprises credit which is backed up by government guarantees.

Sharon Gesthuizen, member of the Dutch House of Representatives, posted a bill last saturday suggesting such a bank. According to her, the economy won’t be able to recover if the credit flow to small and medium enterprises isn’t restored.

Long term investments
When the crisis is over, the NIB will still prove useful, says Gesthuizen. For instance by providing credit to promising initiatives that take a long time to show profit, such as sustainable energy projects. “Private investors usually shy away from those initiatives. In those cases, a National Investment Bank can help out.”

The NIB concept is not new. There has been a National Investment Bank in the Netherlands for 50 years that helped out companies that were healthy but going through a rough time. This bank was privatized in 1999. The Dutch socialist party wants the NIB to return, because it ran well, running up limited losses. “The bank had a positive effect on the economy.”

Extra interest
The SP doesn’t want the bank to return exactly as it was before. One of their alterations to the original concept is an extra raise over the interest rates. “This should cover some of the risks and help return the initial investment of 120 million euros the state puts into the bank.”

According to the socialist party, the NIB should be able to provide up to 1,5 billion euros in credit.

What do you think?
What do you think? Do we really need a National Investment Bank to help SMEs to get through this difficult period? And is such a bank (part) of the solution to the current crisis? Or would such a bank be a pointless money pit? And should suffering companies be left to perish and make room for more healthy enterprises? Let us know.