Finance · 24 March 2016

Fewer loans sought through government schemes despite George Osborne’s continued backing

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The success of government-backed loans schemes is dwindling
Lending to small business via the government’s Enterprise Finance Guarantee (EFG) scheme has continued to fall in the last 12 months, according to recent figures.

Compared to an all time peak of 2, 030 loans in the second quarter of 2009, just 1, 835 small businesses in the UK were granted EFG loans throughout 2015.

Commentators have suggested that the EFG’s diminishing success could be because small firms have tended to look for more regular financing options, often from high street banks, that tend to offer more competitive terms. Improvements in economic conditions more widely have also been cited as a reason for a lack of EFG uptake.

Whittingham Riddell tax partner Duncan Montgomery said: The government’s EFG scheme works on the edges a little more, and as the economy picks up there will be less need for such guarantees.

eFG has served a good purpose, but small businesses already have banking relationships, and banks have very effective sales arms, added Montgomery.


 
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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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