Lending to small businesses is increasing as a result of Enterprise Finance Guarantee (EFG) scheme as reported in this morning’s EN for Business.
Bank lending to SMEs via the Enterprise Finance Guarantee scheme is on the up after the Government publicly named those failing to lend to small firms.
Lloyds, Santander and the Bank of Scotland have all reported significant increases in the use of EFG to support companies seeking credit. In Q4 2012, 855 loans with a value of £97.7 million were issued, up from 767 and £71.6 million in Q3 2012.
Since its launch in 2009 the EFG, which complements commercial bank lending rather than competing against, has lent more than £2bn to over 20,000 SMEs.
The EFG scheme promotes lending by providing a 75 per cent Government guarantee on a banks’ lending, allowing them to provide loans to SMEs that would otherwise have been turned down by lenders.
Michael Fallon, business minister, said:
“This is an important step towards increasing the finance 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.
“This increase needs to be maintained to improve business confidence and demonstrate that responsible lending can still take place.”
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