By Lea Pachta
Companies from printing firms to lighting groups have improved their business prospects after benefitting from more than half a billion pounds of Government-backed loans, Small Business Minister Lord Davies announced today.
More than £580m in loans has been drawn down by more than 5,840 businesses under the Enterprise Finance Guarantee (EFG), and is already being used to boost cash flow and help companies invest in new staff and equipment. Loans totalling around £720m have been offered to businesses.
The announcement came as the Department for Business published a report into the effectiveness of the scheme.
The early stage assessment of EFG showed 94 per cent of respondents said their business prospects had improved following receipt of the loan, and 84 per cent reported EFG had helped their prospects of survival. Almost all EFG recipients felt that they wouldn’t have been able to achieve the same business outcomes at the same speed or scale, if at all, without EFG.
Trade, Investment and Small Business Minister Lord Davies said,
“These impressive results show the Government is providing real help to businesses when they need it, helping to secure jobs and give businesses the capital they need to invest and grow.
“The Enterprise Finance Guarantee has been welcomed by business and, following its recent extension, it will continue to play a vital role in encouraging enterprise and investment and driving productivity and growth throughout the UK economy.”
Other benefits included:
· Improved cash flow
· The introduction of new products or processes
· Using EFG as a platform for businesses growth
· Around 60 per cent said the funding helped to create jobs at their business, either already or anticipated at some point in the future
· 57 per cent of the respondents reported they had saved jobs, all attributed to EFG.
According to the 385 respondent businesses, some 1,870 jobs have been saved, 350 jobs have already been created and a further 550 new jobs are expected in the future, due to receiving EFG-backed lending.
Scaling up this sample to the entire population of firms offered EFG-backed loans up to the start of October, suggests EFG could have already been responsible for saving and creating an estimated 31,600 jobs, with potentially around a further 8,400 jobs to be saved or created in the future.
As of 18 December, more than £1.04bn of eligible applications from over 9,200 firms have been granted, are being processed or assessed. More than 7,100 businesses have been offered loans totalling nearly £717m. This is lending that would not have otherwise taken place.
At Pre-Budget Report, the Chancellor announced EFG would continue for another year. The decision will enable up to £500m of additional bank lending between 1 April 2010 and 31 March 2011 to companies which lack the collateral to get a normal commercial loan. It is available for viable firms with an annual turnover of up to £25m, looking for loans of up to £1m for a period of up to 10 years.
Chief Secretary to the Treasury Liam Byrne said:
“Complacency is the biggest threat to the recovery and Government needs to continue to support the economy until recovery is locked in.
“By extending the Enterprise Finance Guarantee for another twelve months in the Pre-Budget Report, the Chancellor demonstrated the Government’s determination to continue supporting businesses. Withdrawing that support would put the recovery at risk.”