Government News Downing Street to become loan sharks

Oh GOSH Breaking UK News on ITV TV just now.
Government to become loan sharks in bold move that relies on the fact that they won't get cut out as the middle man.

I just watched some News on TV from the ITV that outlined the UK Governments plans to help small Businesses. The plan involves borrowing money at a cheaper rate so they can lend the money to small Businesses to tide them over.

Now I don't know if it is just me but what is to stop whoever the Government plan to borrow the money form cutting out the middle man EG the British Government and dealing direct with those Businesses. What is to say these Businesses would prefer a Government loan to a private loan?

According to The Daily Telegraph here >

Government to underwrite loans

The Government are

quote

"The Government is ready to underwrite up to £40 billion in lending to cash-strapped businesses in an attempt to kick-start Britain's flagging economy, Chancellor George Osborne said today."

unquote

Is it just me or is there not a vicious circle within this scenario where a lot of borrowing is going on so different groups can make money from interest but no real solutions are being found by providing what is in effect a larger debt for smaller companies who may be struggling and in need of such Capitol?