Under fire finance scheme lends £190m

Kevin Dickens, chairman of the UK 200: 'anecdotal evidence'

The government’s flagship small business support initiative, the Enterprise Finance Guarantee scheme, has lent nearly £190m in the four months since it was introduced, although the waiting time for loan approvals is still too long, a trade body has claimed.

The EFG scheme, which was announced in January, was intended to free up £1.3bn worth of lending to SMEs with turnovers up to £25m looking for finance of up to £1m. Under the EFG, the government guarantees 75% of the loan, with banks risking the remaining 25%.

The scheme faced early criticism from small business groups, who claimed that banks were reluctant to use the scheme and there was confusion over the application process. As a result, critics claimed that many small and medium-sized enterprises were struggling to access funds.

Earlier this week, a spokeswoman for the Department for Business Enterprise and Regulatory Reform, told Accountancy Age that 2,059 businesses had been offered loans totalling £186m.

She said that 26 lenders had signed up for the EFG scheme and 21 had made loan offers.

Kevin Dickens, chairman of the UK 200, a trade body that represents 120 firms across the UK with a total of 150,000 SME clients, said there was ‘anecdotal evidence’ of improved access to bank loans.

But he added that the time taken for decisions on loan application was too long, citing his own business’s experience of waiting three months before a loan application for the EFG scheme was approved.

‘Three months can be a lifetime for a small business,’ he said.

He added that the waiting time for decisions on EFG loan applications should be no longer than one month.