New figures have shown that bank lending to small and medium businesses through the enterprise finance guarantee scheme has started to show improvement. According to government reports, the Bank of Scotland, Lloyds and Santander have all reported increases in businesses using the EFG scheme to secure lending for their company.
These three banks recorded Q4 lending for 2012/13 as £91.7 million, which was the highest levels recorded since September 2011. This is a turn up that has followed after the government has ‘named and shamed’ publicly those banks who are failing to use the scheme to help small business. The EFG scheme is a major initiative which aims to increase access to finance for businesses with viable business plans. Overall to date it has lent over £2 billion to 20,000 SMEs – a great track record.
Use of the EFG scheme peaked when it was first launched in 2009, but after a fall off leading to a big 2012 dip, the Department of Business, Innovation and Skills (BIS) has taken action. As well as making the scheme more accessible and more straightforward to use, Business Minister Michael Fallon sent out his challenge to the five main high street banks to make better use of the scheme.
Fallon commented: ‘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 for SMEs and economic growth, which will depend on businesses having the certainty that banks are lending. This increase need to be maintained to improve business confidence and demonstrate that responsible lending can still take place.”