More than 10,000 small and medium-sized businesses (SMEs) have accessed £1.04 billion worth of loans via the Government’s Enterprise Finance Guarantee (EFG) scheme, according to independent research by Durham Business School.
Through the EFG, SMEs who are lacking in security can access loans of between £1,000 and £1 million, with the Government acting as guarantor on 75 per cent of the amount. EFG loans currently account for between 1-2 per cent of all bank lending to SMEs.
The study found that, since May 2010, the EFG scheme has:
- created 6,500 new jobs
- saved a further 12,375 jobs
- provided £1.1 billion net benefit to the economy
The research concluded that a Government-backed loan guarantee scheme, such as the EFG, was “especially important when the supply of credit is constrained in the economy.”
Business minister Michael Fallon urged banks to increase the amount they’re lending through the scheme. He said: “Clearly the demand is there for this type of financial support so we must start to see an increase in take-up.”
“I have already begun publishing EFG lending by each individual bank, because businesses should know which bank they are best off approaching and I will continue holding the banks to account until lending levels improve.”