EFG lending falls to £92m
Lending under the government's flagship enterprise finance guarantee (EFG) scheme has fallen by a further 11 per cent in the last three months.
Loans provided under the scheme totaled £92m for the three months to 31 July, according to Aldermore. The government had lent £103m in the final quarter of 2010 under the programme.
The aim of the scheme is to encourage banks that had been reluctant to lend to small businesses to extend them credit. As part of the scheme, the government guarantees part of the loan.
Lending under the scheme peaked in the second quarter of 2009 and has been steadily declining since then.
The amount of money being lent to small businesses is now 49 per cent of the level at the same time last year (£187.6m).
Tony Smedley, regional managing director at Aldermore in the Midlands, said: "Under Project Merlin, the UK banks have set themselves a target for gross business lending of about £190bn for 2011, which puts into perspective the amount of money currently now being lent through EFG.
"EFG should be a very powerful tool to get those banks that had been slow to lend to SMEs to extend them more credit. Bank of England data shows that the shortage of credit for small businesses is still a huge problem. Really, we should be looking at how more funding can be delivered through EFG rather just allowing it to dwindle away.
"Lending through the EFG is now half of what it was at the peak – that should be a concern."
