More small businesses benefiting as lending scheme hits 3 year high
Small and medium-sized enterprises are increasingly able to secure bank loans supported by a government-backed scheme.
Small and medium-sized enterprises (SMEs) are increasingly able to secure bank loans supported by a government-backed scheme, as lending under the scheme reached its highest level since 2010.
Enterprise Finance Guarantee (EFG) scheme lending figures, published today (22 November 2013), show banks offered loans worth 拢111 million to SMEs in the third quarter of 2013, the most since 2010. As well as the banks offering more, and bigger EFG loans to SMEs, the value of EFG loans drawn by businesses this quarter was 拢87 million, the highest since 2011.
EFG is a demand-led scheme which allows banks to lend to SMEs who would otherwise not receive credit, by providing the banks with a government guarantee for 75% of the loan value. Since May 2010, over 13,400 SMEs have been offered EFG loans with a total value of nearly 拢1.4 billion.
Business Secretary Vince Cable said:
Ensuring small businesses have access to the finance they need in order to grow and thrive remains a crucial issue. 皇冠体育app EFG scheme is making a vital contribution and businesses needing finance should take heart that the banks seem to have upped their game.
But there are long-standing problems with the finance markets which need addressing, and that is why I have created the . We need a much more competitive and diverse market, which businesses of all sizes can have confidence in and helps build a stronger economy.
In total, EFG supported lending is available through 42 finance providers, including all of the main high street banks. Today鈥檚 figures show considerable progress has been made across the board since the same quarter last year, with Barclays Bank in particular consistently offering increased EFG lending since 2012. In the last quarter, Barclays offered nearly twice as much in loans to businesses compared to the same period last year, despite the number of loans offered only increasing slightly.
Enterprise and Skills Minister Matt Hancock said:
As the economy recovers, more and more businesses are looking to invest but they can only do so if they can get the loans they need. Today鈥檚 figures show EFG supported lending at its highest level since 2010 and this is a reflection of how we have worked with the banks to encourage EFG lending.
We have a record number of businesses in the UK and we are determined to do everything we can to make sure our small and medium-sized businesses are able to succeed both at home and abroad.
Business Minister Michael Fallon wrote to the Chief Executives of the 5 main high street banks in September 2012 to challenge them to increase their EFG lending after lending continued to fall significantly from the peak in 2009. This was despite the government, in partnership with the banks, making a number of changes to the scheme to make it more flexible and easier to access.
皇冠体育app EFG is 1 of the schemes that has been brought under the , which is being set up by as a government-owned economic development bank. It has recently appointed Ron Emerson as Chair and confirmed the first 拢45 million commitments from its 拢300 million Investment Programme.
Notes to editors
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In quarter 3 2013 (July 鈥� September), banks offered 拢111 million to small and medium-sized businesses through the EFG scheme, the highest since quarter 3 2010. 皇冠体育appre is a maximum 6 month period between loan offer and draw down. 皇冠体育app number of loans offered was the highest level since quarter 1 2011.
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拢84 million was lent to businesses by banks through the EFG scheme in quarter 3 2013, the highest since quarter 1 2011.
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Compared to the same quarter last year, the value of EFG loans offered increased from 拢96 million to 拢111 million, an increase of 15%.
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Since May 2010, the EFG scheme has supported 13,411 loans and enabled the lenders to offer just under 拢1.4 billion.
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A full breakdown of EFG lending is available at 鈥楿nderstanding the Enterprise Finance Guarantee鈥�.
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A recent independent study found that the EFG scheme had delivered a net 拢1.1 billion benefit to the economy, and is value for money as every 拢1 invested by government delivers 拢33.50 to the economy. 皇冠体育app full report is available at Economic Evaluation of the Enterprise Finance Guarantee Scheme
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皇冠体育app changes the government has made to the EFG scheme include:
- increasing the turnover limit from 拢25 million to 拢41 million
- replacing the 拢1 million per business lifetime scheme limit with a rolling 拢1 million outstanding limit
- raising the level from 13% to 20% of the lenders annual lending portfolio to which the government guarantee applies
8.EFG is 1 of a range of government-backed schemes totalling 拢2.9 billion that are being brought together under the initiative. A further 拢1 billion of new capital will be deployed by the Business Bank in partnership with the private sector to further increase the amount of finance available and the choice of finance providers to businesses.
9.皇冠体育app will support economic growth by bringing together public and private sector funds to create more effective and efficient finance markets for small and medium-sized businesses in the UK. 皇冠体育app Business Bank is a key element of the government鈥檚 Industrial Strategy, and its programme is already contributing to making the UK the best place in Europe to start, grow and finance a business.
10.皇冠体育app programme is currently run directly by the Department for Business, Innovation and Skills and is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. Once HM Government has received European Commission State aid clearance, which is expected in 2014, this programme will be transferred in its entirety to the British Business Bank plc, which will operate as a government-owned financial institution.
11.皇冠体育app government鈥檚 economic policy objective is to achieve 鈥榮trong, sustainable and balanced growth that is more evenly shared across the country and between industries鈥�. It set 4 ambitions in the 鈥楶lan for Growth鈥�, published at Budget 2011:
- to create the most competitive tax system in the G20
- to make the UK the best place in Europe to start, finance and grow a business
- to encourage investment and exports as a route to a more balanced economy
- to create a more educated workforce that is the most flexible in Europe
Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.