The Enterprise Finance Guarantee (EFG) scheme, a major government initiative designed to increase access to finance for small businesses that may not be eligible for a commercial loan, has now made more than £2bn of funding available to SMEs, new figures reveal.
Lending through the scheme peaked in 2009 after its launch, but figures for last year were disappointing, leading to a push by government to encourage banks to use EFG more. In the final quarter of 2012/13 banks offered 885 loans with a value of £91.7m. This compares with 767 loans valued at £71.6m in Q3 of 2012/13.
Business minister Michael Fallon said: “This is an important step towards increasing the finance that small firms can access. Some banks are working harder, and they should be recognised for that.
“It’s important this isn’t a one off. Banks must continue to improve their use of EFG. Access to finance is a crucial issue to SMEs and economic growth will depend on businesses having the certainty that banks are lending.”
The minister went on to explain that EFG complements commercial bank lending rather than operating in competition with it. “It ensures those SMEs that would be turned down for a bank loan due to lack of security or sufficient track record are able to secure finance.
“It promotes lending by providing a 75% government guarantee on a bank’s lending, allowing them to provide loans to SMEs that would otherwise have been turned down.”
Total lending through the scheme since it began in January 2009 now stands at £2.14bn, with more than 20,000 SMEs being offered loans.