Considered vital to British manufacturing, the car industry is seen as at very high risk in face of the economic downturn and that as many regional economies depend on such manufacturing for their survival, it was imperative that the government secured these loans.
But the finer detail of the loans are not without a catch. Perhaps taking the lead from US President Obama yesterday, the UK loans must be used to establish the foundations for a low-carbon future and manufacturers were thus implored to reinvent and develop more environmentally friendly technologies both in its vehicles and its manufacture, a move which drew praise from green groups.
It was also made clear that the loans were no to be seen as a blank cheque and that any such borrowings must provide schemes whereby jobs are retained and or created providing what they say is "value for money" from the loan.
"The car industry has to change and suceed in the new world," said Lord Mandleson, Business Secretary (pictured above). "The industry is not a lame duck and this is no bail out."
Responding to the announcement Shadow Business Secretary Ken Clarke referred to the package as a "pretty small beer" and went on to say that "I'm slightly disappointed. I thought the secretary of state who I am shadowing would produce some new ideas, some dynamite," he said.
"Is it the case that the secretary of state has not produced a bail-out because the Treasury has finally won an argument inside the government and explained to him that they can't afford the kind of support for the industry that was being trailed." Clarke continued.
The government has been accused of dithering on the situation as a whole and it has been suggested that these loans could have been made available as early as October last year.
Car manufacturers have also united to say that although the package is welcomed they question as to whether the amount will be enough.
The finer details of the loan including distribution timing will be sorted in meetings between the Business Secretary an manufacturing bodies today.