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Bank of England easing up.

The Bank of England finally announced in recent weeks, after months of  speculation, that it would embark on its next round of lending.  This move is to hope stave off the double dip recession economist have been predicting.

The ease in lending should re boost the economy.

Despite all the hype the Bank Of England’s published figures how that lending to SME was short of the target in July.

The Enterprise Finance Guarantee (EFG) scheme was  launched in November 2008, by the then Labour government. It aims to increase  the availability of finance for SMBs by providing a government guarantee for 75  per cent of the value of an individual loan to a business with a turnover of  less than £25m.

But the EFG scheme has been faltering, with lending decreased by 42 per cent  over the past year, and now unlikely to reach the £600m allocated for lending  under the scheme in the current financial year.

The evidence suggests it is not lack of demand that is reducing the size of  the scheme, but lack of affordable supply. Seventy-five per cent of the SMBs we  asked in a recent poll indicated that they think bank lending margins on loans  are too high. Only eight per cent said their ability to access bank loans has  improved over the past year. Thirty-three per cent said it continues to get  worse.

Another form of asset finance, invoice financing, is allowed under  the EFG but it is not directly related to a particular business investment and  does not share leasing’s tax benefits or usefulness in spreading the cost of  making new investments in IT.

Although not allowed under the scheme, invoice discounting and factoring are becoming an increasingly popular way to gain finance through companies invoices. Its a simple and quick way to gain finance for your business.

 

 

 

 

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