Government lending to small firms shrinks dramatically

A new report pointing to how the government’s small business lending scheme has declined by 40% in the last year underlines the problems being faced by the UK’s smaller business owners.

Carried out by  financial services company Syscap, the study found that the government made £433m available under the Enterprise Finance Guarantee (EFG) scheme over the 12 months to July 2011 compared to the £742m made available under the auspices of the scheme – which guarantees 75% of the value of a loan to businesses turning over £25m or less.

The researchers also discovered that from April to June 2011, only £93.1m was offered to small firms – little more than a third of the figure reached in the second quarter of 2009.

Syscap chief executive Philip White believes the scheme should be extended to include lease-based finance arrangements, which are not currently covered by its terms.

White added: “With economic performance in the past two quarters looking lacklustre and the ongoing eurozone crisis continuing to erode business confidence, an expansion of lending under the EFG scheme is urgently needed to help put the economy and job-creation firmly back on the growth track.”

The Syscap survey further underscores Wanobe’s call for the creation of a National Small Business Owners Day to celebrate the real heroes of the marketplace, Britain’s hard working small and mid sized business owners.

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About Wanobe, the business knowledge network
Writer, journalist and broadcaster, sixty-something David likes nothing better than being with family and friends, eating out and drinking great wines, and scuba diving.

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