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UK government-backed lending scheme for SMEs grows to highest level since 2010

Lending to small and medium-sized enterprises (SMEs) under the UK government’s Enterprise Finance Guarantee (EFG) scheme has reached a three year high, the Department for Business, Innovation & Skills (BIS) revealed on Friday.

The Enterprise Finance Guarantee (EFG) scheme has published its lending figures, which show that SMEs secured bank loans worth GBP111m in the third quarter of 2013 under the scheme, the highest amount since 2010. Also, the value of EFG loans drawn by businesses this quarter was the highest since 2011 at GBP87m. Compared to the same quarter in 2012, the value of EFG loans offered increased by 15% from GBP96m.

According to the BIS, the EFG demand-led scheme has been brought under the British Business Bank, which is being set up by as a Government-owned economic development bank. It allows banks to lend to SMEs that would not normally receive credit. Under the scheme, banks are provided with a government guarantee for 75% of the loan value. Over 13,400 SMEs have reportedly been offered EFG loans with a total value of nearly GBP1.4bn since May 2010.

The British Business Bank has confirmed the first GBP45m commitments from its GBP300m Investment Programme. Ron Emerson was recently appointed as the bank’s chair.

Supported lending through EFG is available through 42 finance providers in the UK, including all of the main high street banks. Barclays Bank has reportedly consistently offered increased EFG lending since 2012 and is said to have offered nearly twice as much in loans to businesses in the last quarter, compared to the same period in 2012.

Business Secretary Vince Cable stated: “Ensuring small businesses have access to the finance they need in order to grow and thrive remains a crucial issue. The EFG scheme is making a vital contribution and businesses needing finance should take heart that the banks seem to have upped their game.

“But there are long-standing problems with the finance markets which need addressing, and that is why I have created the British Business Bank. We need a much more competitive and diverse market, which businesses of all sizes can have confidence in and helps build a stronger economy.”


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