The government has applauded the success of its flagship £1.3bn loan guarantee scheme, despite mounting claims from business groups that banks are not promoting the service.
Speaking earlier this week, business secretary Lord Mandelson said the Enterprise Finance Guarantee (EFG) scheme, launched to help small businesses access credit in the downturn, was providing real help to businesses.
He added that more than 1,300 loans, worth almost £145m, were being processed through the scheme, while the value of eligible loans has increased from less than £3m in the first week to around £30m a week.
“These figures are good news, showing the Enterprise Finance Guarantee is providing real help to businesses,” he said.
“The scheme has taken off since its launch in January with registered lenders now seeing a ten-fold increase in loan demand,” he said.
He also revealed the findings of the government’s first mystery shopper exercise, which found that three-quarters of lenders had a detailed awareness of the EFG.
Despite this, a number of recent surveys from business lobby groups have suggested that frontline bank staff are still not offering the service to eligible businesses.
Earlier this month, a survey of 250 UK companies by the British Chambers of Commerce (BCC) found that 90% of them had no idea that their bank offered the scheme.
Mandelson admitted that more needed be done to promote the EFG. “We must continue to work with all 26 lenders signed up to the scheme to ensure frontline staff are offering it where appropriate to small companies across the country,” he said.
Launched in January this year, the EFG replaced the Small Firms Loan Guarantee Scheme. It is intended to enable an additional £1.3bn of lending to businesses up until March 2010. Under the EFG, the government provides a 75% guarantee on individual loans of up to £1m to viable businesses with an annual turnover of up to £25m.
© Crimson Business Ltd. 2009