SMEs Ignoring Enterprise Finance Guarantee

Fri, 04 Sep 2009

Most small businesses in the UK are snubbing government support to help them through the recession, according to new research.

A survey by Clifton Asset Management, a provider of specialist financial and strategic advice to SMEs, found that 68 per cent of small business owners have heard of the Enterprise Finance Guarantee (EFG) scheme, but of those, 93 per cent said they saw "little point" in applying for it.

Those that did apply for the government’s flagship scheme were left disappointed, with just 1 per cent of the 1,000-plus SME owners polled saying they actually received financial support .

Under the terms of the EFG, the government will guarantee bank lending to UK firms with a turnover of up to £25 million who are struggling to access the finance they need. Business loans of up to £1 million are available through the scheme.

Anthony Carty, director at Clifton Asset Management, said: "We learned recently that the amount of money in the form of loan guarantees which got through to businesses over the last financial year had actually fallen on the previous year and was well short of the £1.3 billion budget which had supposedly been set aside."

"These figures, and the results of our own extensive survey, back up the huge store of anecdotal evidence we constantly receive from the business owners we help and advise who report it is near-impossible for them to access finance from the banks, regardless of the EFG."

He added that it was a damning statistic that over a quarter of respondents said they had never heard of the EFG, which suggests that "the government isn’t putting as much pressure on the banks to promote the scheme and lend cash" as people think.
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