Minister urges smaller businesses to enquire about government loans

SMEs that are struggling to secure finance from the banks should look at the possibility of using the government’s loans scheme.

That was the message of Business Minister Shriti Vadera who was welcoming the Business and Enterprise Select Committee’s backing for the Enterprise Finance Guarantee (EFG) scheme.

The EFG was introduced to help businesses find funding while credit conditions are tight.

The scheme is delivered through banks and other lenders and is intended to ensure an extra £1.3 billion of lending to businesses up to the end of March 2010.

It provides a 75 per cent government guarantee on individual loans of up to £1million to viable businesses with an annual turnover not more then £25 million.

The guarantee can be used to support new loans, refinance existing loans or to convert part or all of an existing overdraft into a loan to release working capital.

Around 147 businesses every week receive an EFG loan with an average value of £99,000.

The Minister welcomed the Committee’s support for the scheme and urged more businesses to ask their lenders about it: “I encourage any small and medium business experiencing difficulty in obtaining a loan or overdraft to talk to banks about the possibility of using the EFG.”

So far a total of 4,054 businesses have been offered EFG loans, with an overall value of £400 million.

There are 27 lenders registered with the scheme: Airdrie Savings Bank, Alliance & Leicester Commercial Bank, Bank of Baroda, Bank of Ireland (NI only), Bank of Scotland, Barclays, Business Enterprise Fund, Business Finance Solutions, Clydesdale Bank / Yorkshire Bank, The Co-operative Bank, Donbac Finance Ltd, DSL Business Finance, First Trust, Foundation East Ltd, GLE oneLondon, HSBC, Lloyds TSB, NEL Fund Managers, Northern Bank (NI only), The Royal Bank of Scotland / Natwest, State Securities, South West Investment Group, Triodos Bank, UK Steel Enterprises, Ulster Bank (NI Only), Venture Finance, Whiteaway Laidlaw Bank.

Any business wanting more information about EFG loans can go to http://www.businesslink.gov.uk/bdotg/action/home or call 0845 600 9006.