By Daniel Hunter
A government scheme to help small businesses access finance has delivered a net benefit of £1.1 billion to the economy. Every £1 invested by the government has delivered £33.50 for the economy.
These findings are contained within new independent research on the Enterprise Finance Guarantee (EFG) scheme published today (Tuesday). The scheme has helped over ten thousand businesses access £1.04 billion of loans since May 2010.
Business Minister Michael Fallon is calling on banks to increase their lending through this successful scheme.
Other findings include:
- The scheme is successfully reaching businesses operating at the margins of traditional bank lending. Over 80 per cent of EFG users would not have been able to secure a loan through conventional bank lending, mainly because they lacked sufficient collateral.
- Businesses which have received an EFG loan have grown at similar levels to other businesses. The scheme is not supporting inferior quality businesses
- The scheme has created an additional 6,500 jobs — equivalent to 0.96 jobs per recipient business.
- It has saved 12,375 jobs since its introduction — equivalent to 1.84 jobs per recipient business.
- It has a net economic benefit of £1.1 billion to the economy, and is real value-for-money for the taxpayer as every £1 invested by the exchequer delivers a benefit of £33.50 to the economy.
"Enterprise Finance Guarantee loans are delivered through the banks, and I want to see them making more use of the scheme," Business Minister Michael Fallon said.
"This latest research shows that the EFG is helping precisely those businesses who can't get finance elsewhere. It is getting money to where it is needed, saving jobs, and delivering a huge benefit for the wider economy.
"Clearly the demand is there for this type of financial support so we must start to see an increase in take-up. I have already begun publishing EFG lending by each individual bank, because businesses should know which bank they are best off approaching and I will continue holding the banks to account until lending levels improve."
The EFG scheme was introduced in response to the credit crunch, and has remained in place to help tackle the difficulties small business face in accessing finance from the banks.
Michael Fallon wrote to the biggest banks last year urging them to increase lending through the EFG scheme. In December, the government published EFG lending data broken down by bank, to ensure increased transparency.
This latest research demonstrates the value of the EFG scheme not just for individual businesses but to the wider economy. The government now expects the banks to redouble their efforts to provide finance to viable businesses through the EFG scheme.
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