Business finance scheme picks up lending
Lending through the Government's Enterprise Finance Guarantee (EFG) scheme to small businesses picked up to £84 million the second quarter of 2013, following a period of decline.
It is the highest level of lending since March 2011, with lending picking up 17 per cent compared to the same quarter last year.
However, the lending scheme remains almost 60 per cent below its peak in Q3 2009 when it lent more than £200 to small and medium sized enterprises (SMEs).
Business minister Michael Fallon wrote to high street banks taking part in the scheme last year to express concern that lending via the scheme was declining.
Launched in 2009, the EFG scheme encourages banks to increase lending to SMEs by providing government guarantees for up to 75 per cent of loans worth between £1,000 and £1 million.
Over 12,400 businesses have been offered loans totalling £1.2 billion via the scheme since May 2010.
Michael Fallon said: "As a demand-led scheme, increased EFG lending shows that businesses are increasingly looking to invest and grow, and this is a positive indication for growth in the wider economy."
"Access to finance remains a crucial issue for SMEs and while I welcome the increased EFG lending by the banks, it is only scratching the surface of the problem. We have made the EFG scheme more flexible and easier for banks to use, and we are taking action to improve competition in the SME lending market through the business bank."
Over the past year the Government has made a number of changes to the EFG, including increasing the turnover limit for eligible businesses from £25 million to £41 million.
Source - Gibson Hewitt