EFG lending falls, finds Aldermore
The average size of loans offered to businesses under the government's enterprise finance guarantee (EFG) scheme has fallen 7 per cent over the past 12 months, according to new research published today. The study by Aldermore also revealed that the amount of funding offered under the scheme had fallen from £186m in the first three months of 2010 to £149m in the second quarter.
Companies in the West Midlands were granted a total of £14.5m in the second quarter of 2010.
Over the past 12 months the average size of each loan offered under the scheme has dropped from £107,252 in the second quarter of 2009 to £99,859 in the second quarter of 2010.
Aldermore also revealed that a reduction in loan approvals under the EFG scheme meant that the amount of funding offered under the scheme had fallen from £186m in Q1 2010 to £149min Q2 2010.
Tony Smedley, regional managing director at Aldermore Invoice Finance in the Midlands, said: “Not only has the total amount being offered under this scheme fallen but the amount of money being granted to each of the companies that got through the obstacle course has fallen too.”
“Something is not working.”
“We think the EFG scheme is a great idea, the government thinks the EFG scheme is a great idea, the SMEs think the EFG scheme is a great idea. But clearly, if it is going to play more than a very marginal role in funding SMEs there needs to be some pretty quick changes made to it.”
Small and medium sized businesses in Northern Ireland were granted the least amount of funding - £3.2m in the second quarter of 2010.
London-based companies were granted the most, a total of £18.9m for the three-month period.
Smedley added: “We do need SMEs to take up some of the slack in the economy especially with the public sector cutting costs. But if SMEs are really less ambitious for growth and less keen to borrow than a year ago, then that is a worry.”
Under the EFG scheme, businesses have to pay a 2 per cent levy on the outstanding loan to the Department of Business, Innovation and Skills as well as interest to the lender.
