Clifton Asset Management

ENTERPRISE FINANCE GUARANTEE A FLOP, ACCORDING TO SMALL BUSINESS

Most owner-managers see no point applying for the government scheme designed to kick-start bank lending, says Clifton Asset Management

The vast majority of the UK‘s small businesses are shunning the government‘s flagship scheme designed to help them through the recession.

Of more than 1,000 small business owner-managers questioned across the UK, 68 per cent said they had heard of the Enterprise Finance Guarantee (EFG) scheme but, of those, a full 93 per cent said they saw “little point” in applying for it.

That‘s the finding of research carried out by Clifton Asset Management (CAM), which provides specialist financial and strategic advice to SMEs.

Under the terms of the EFG, the government will guarantee bank lending to UK businesses with a turnover of up to £25 million who are not easily able to access the finance they need, enabling them to secure loans of up to £1 million.

The scheme was introduced to support viable companies who find themselves at the margins of commercial lending through things like insufficient security or because their reasons for borrowing contain elements of risk.

Anthony Carty, director at CAM, said: “We learned recently from the government‘s own figures 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.”

Of the small businesses in the survey who had decided to apply for EFG help just 1 per cent actually received it.

Mr Carty also pointed out that a significant minority of the survey‘s respondents were not even aware such a scheme existed.

“What our research is also telling us is that, even though the majority of small business owners have heard of the EFG, that still leaves over a quarter (28 per cent) who say they have never even heard of it and another 4 per cent who say they are unsure,” he said.

“If this is supposed to be the government‘s flagship idea for helping UK SMEs out of recession then it is a damning statistic that over one in four of the people we spoke to didn‘t even know what the EFG was, leaving you with the sense that maybe the government isn‘t putting as much pressure on the banks to promote the scheme and lend cash as they would like us to believe.”

ENDS 3rd September 2009

For further information please contact Louie Hadley, Sturgess Van Damme, on 01275 349011 or email louie@sturgessvandamme.co.uk