From the organisers of the Natural Stone Show

 

 

 
Market Intelligence

Government-guaranteed loans to small companies increase 17%
, By Eric Bignell

Lending to small companies through the Enterprise Finance Guarantee scheme reached £84million for the second quarter of 2013 – the highest level since the first quarter of 2011 and 17% up on last year.

Enterprise Finance Guarantee (EFG) provides banks (and, since April, also wholesalers) a government guarantee on 75% of loan values, including trade credit given by wholesalers. This means companies that might not otherwise get credit, can now potentially be offered trade accounts by wholesalers, although only B&Q and Screfix are so far signed up for the scheme.

Since May 2010, when EFG started, more than 12,400 SMEs have been offered these partially government-guaranteed loans by banks to a total value in excess of £1.2billion.

Both Lloyds Banking Group and Santander have continued to increase their EFG lending, with Lloyds lending almost twice as much in the second quarter of 2013 (£13.9million) as in the same quarter last year.

Business Minister Michael Fallon says: “As a demand-led scheme, increased EFG lending shows that businesses are increasingly looking to invest and grow, and this is a positive indication for growth in the wider economy.

“Access to finance remains a crucial issue for SMEs and while I welcome the increased EFG lending by the banks, it is only scratching the surface of the problem. We have made the EFG scheme more flexible and easier for banks to use, and we are taking action to improve competition in the SME lending market through the business bank. But in the short-term we need the high street banks to help our businesses grow and keep the recovery going.”

Michael Fallon wrote to the main high street banks last year to express concern that EFG lending was declining and that small and medium size businesses were being starved of credit.

The separate EFG trade credit scheme (through wholesalers) is intended to be of special benefit to the construction sector and the Government reports interest from other wholesalers in joining the scheme. The Department for Business hopes to confirm details of new providers shortly.