According to recent figures released by the government, bank lending to small and medium businesses through the Enterprise Finance Guarantee (EFG) scheme have started to show improvement. This is good news not only for businesses but also for the government, which has experienced failures with both Project Merlin and the Funding for Lending scheme.
This upturn in lending through the EFG scheme has come after the government publicly named and shamed the banks who weren’t making use of the scheme. Bank of Scotland, Lloyds and Santander have all reported marked increases in the use of the EFG programme to support businesses of all sizes seeking extra funding. In fact, lending for the final quarter of 2012/13 was valued at £91.7 million – the highest level since September 2011.
The EFG is proving to be a valuable tool for the government to use in helping the SME market. Its aim is to increase access to finance for small and medium businesses, and to date has resulted in more than £2 billion being lent to over 20,000 small and medium companies. In a lending environment where traditional funding through the banks is often hard to access, this is just the kind of government scheme that is needed.
Business Minister Michael Fallon has 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 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.’