The Government's repeated attempts to bail out the banks have worked so well, the UK banking sector is now worth less than Tesco. And Peter Mandelson has now turned his attention to helping small businesses with a set of initiatives that will be administered by the same banks.

On the face of it, the initiatives should be good news for the UK grocery industry as all but the largest businesses are eligible for some support. But as liquidity in the grocery industry dries up, do these latest measures go far enough?

The keystone of the new plan, announced on 14 January, is the Working Capital Scheme, under which the Government has pledged to shoulder some of the risk of short-term bank loans to companies with a turnover of £500m or less.

Separate schemes to guarantee investment loans to businesses with a turnover of £25m or less, and inject £75m long-term equity into small businesses that have exhausted other funding sources, were also unveiled.

But the most important is the Working Capital Scheme. The bank-administered scheme, which is an attempt to stem the reduction and withdrawal of overdraft facilities and other credit lines, will initially support up to £2bn of lending, rising to £20bn over time.

The initiative has been broadly welcomed by senior industry figures, but some are sceptical as to whether it will work.

"Access to credit is vitally important for the retail sector," says ACS public affairs director Shane Brennan. "It's important the banks now work to deliver this new money. As yet, we haven't seen evidence of credit loosening up."

Suppliers and manufacturers agree it is a good idea, but question whether bank lending could be reinvigorated without supporting trade credit insurance.

"Companies are finding their funding squeezed as banks prop up their own balance sheets," says FDF director of communications Julian Hunt. "What the Government is trying to do is very welcome, but we're holding our breath to see if it works."

Smaller food suppliers have had banking facilities withdrawn because their trade credit insurance limits have been cut. Trade credit insurers protect suppliers against their customers defaulting on payments. Many overdrafts rely on this insurance, which saves banks making their own assessment of a supplier's customer base.

As trade credit insurers withdraw cover to reduce their exposure to the downturn, viable businesses have seen their overdrafts reduced or removed. "Until the Government moves to guarantee trade credit cover, like the French Government did, bank credit won't resume," says one supplier.

Farm businesses, meanwhile, won't benefit from the rescue package as they are excluded from several of the Government's new measures. "We're trying to find out the reasons agriculture has been excluded," says NFU chief economist Tom Hind. "It seems to be because many farmers receive state subsidies. However, in sectors like horticulture and poultry, very few farmers receive state aid. It seems to be a bit of a cop-out to impose a blanket exclusion."

The Government has hinted that if the first £2bn of guarantees does not prove effective, it will review the remainder of the scheme. The big fear for many experts is that in the current context even a £20bn aid package would be small fry.

The latest bank bailout has failed to restore investor confidence, with several banks losing more than half their value in a week. Some fear that until the banking sector has been rebuilt, further bailouts are tantamount to pouring money down the drain.

"In the context of the liquidity crisis, this is small beer," says Duncan Swift of Grant Thornton. "This is not much more than a nice gesture - a £20bn gesture, but a gesture nonetheless."