Government Small business loans to small businesses continues to drop in 2016
Government remains an active participant in helping with loans to UK businesses. However, in recent months the approval rates of these loans by the government-backed Enterprise Finance Guarantee (EFG) scheme has dropped to its lowest figure ever, according to research by Boost Capital.
Only 1, 835 small businesses were granted EFG-backed loans during the whole of 2015 with only 446 small firms securing in the last quarter of the year.
The EFG scheme sees the government (through the British Business Bank) act as a partial guarantor on up to 75% of bank loans between £1,000 and £1.2m made to small businesses who cannot offer any assets as security.
Following an announcement by the chancellor in the budget 2016, the EFG will be extended until 2018.
Boost Capital, managing director Alex Littner, said:
“The budget was positioned with small businesses at its heart yet the Enterprise Finance Guarantee scheme that was designed to serve capital-starved small businesses cannot be heralded a success when lending continues to fall.”
“Ironically, there are more sources of financial help for small and medium enterprises now than ever before, but the government needs to push schemes like EFG and bank referral scheme to help small businesses locate this much needed capital”