By Claire West

The UK’s main banks and financiers see very little benefit in one of the Government’s flagship small business loan schemes, it was announced today.

The Asset Based Finance Association (ABFA) asked its members, the UK’s top clearing banks and independent financiers, how beneficial the [n]Enterprise Finance Guarantee scheme[/b] has been to their clients. The overwhelming majority saw the scheme as providing very little benefit.

Kate Sharp, chief executive of the ABFA, said: “The ABFA survey findings appear to support concerns that the scheme itself may be to blame, as the banks do not like recommending it because the benefits for both small businesses and the lender itself are just too low. The government’s intention in trying to make funding easier for small businesses is spot—on, however the scheme itself isn’t working well. The government needs to work harder at making it more usable and reduce the administrative time involved in setting it up.”

These findings come on the back of figures showing that lending under the scheme has fallen by 23 per cent in the six months leading up to the general election. It is understood that Vince Cable, the Business Secretary, has spoken to the main high street banks about this drop in lending under the scheme.