The European Commission has been forced to relax its tough rules on state aid so that over the next two years it will be easier for cash-strapped companies to arrange finance during the credit crunch.

The changes, which took effect yesterday, are designed to ensure sufficient bank lending to companies, to allow businesses with liquidity problems to receive limited grants, and to encourage investment in environmentally friendly products. Neelie Kroes, the European Competition Commissioner, said that the measures would give every government “the freedom to create made-to-measure solutions for their economy in this crisis”.

The concessions will allow state aid, subject to certain conditions, to be given to companies without initial clearance from Brussels being necessary.

The new thinking comes after concerted pressure in recent weeks from a number of member states that have found the Commission's procedures to be too cumbersome and bureaucratic. Mrs Kroes rejected the criticisms yesterday, saying that the Commission could act quickly when presented with the full facts of a case.

She insisted that any delays were caused by the failure of countries to provide all the necessary information.

Under the changes, which are aimed mainly at helping small businesses, governments may give aid up to €500,000 (£459,000) over the next two years to help companies to weather their difficulties.

State guarantees for loans at a reduced premium will be allowed, as will subsidised interest rates for all types of loans, especially for the manufacture of green products.

Venture capital rules will also be relaxed to increase the funding that the state may provide for small businesses from €1.5 million to €2.5 million. The new rules, which will run until the end of 2010, were immediately criticised by UEAPME, the European organisation for small and medium-sized businesses.

Andrea Benassi, its secretary-general, complained that any extra funding might go to companies that had got into difficulties because of structural problems and overcapacity and not to those suffering from the effects of the credit squeeze.

“Put simply, the Commission has given member states a licence to burn taxpayers' money,” he said.

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