By Daniel Hunter
The Government has today (Tuesday) published new data detailing lending by specific banks through the Enterprise Finance Guarantee scheme.
For the first time, this provides a breakdown by individual lenders, allowing businesses to identify which banks are making most use of Government assistance to increase access to finance.
Business Minister Michael Fallon wrote to the Chief Executives of the five main high street banks in September to encourage them to increase their use of the Enterprise Finance Guarantee (EFG) scheme as lending levels have been disappointing since peaking 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.
“It is crucial that banks play their part in making finance available to businesses and support growth in the economy. Banks have to lend responsibly but it is clear that a number of lenders need to up their game," Business Minister Michael Fallon said.
“The EFG scheme has been made more flexible and is now available to even more businesses. Publishing lending data should encourage these financial institutions to do more to help business thrive.
“By being more transparent on lending figures, the government is giving SMEs the information to best secure the finance they need to grow their business. It also enables new market entrants to identify opportunities and drive improved competition and choice.”
The EFG scheme allows banks to extend lending to small and medium-sized enterprises (SMEs) by providing a Government guarantee which allows banks to lend to businesses which otherwise lack the security or track record for a standard commercial loan. Access to finance is a crucial issue for SMEs, and over the past year the Government and the banks have worked together to make a number of changes to the EFG scheme to widen its availability.
However, despite these changes the level of lending through the EFG scheme for this financial year is forecast to be broadly equal to last year. The Government has made £500m available for guarantees for 2012-13 but EFG lending is expected to be only £315m.
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