Lending to UK SMEs drops

16/08/2010

Over the past year, lending under the flagship financial support scheme for small and medium-sized enterprises (SMEs) has fallen by almost 60 per cent, according to new figures.

Data from the Department for Business, Innovation and Skills, show that lending through the Enterprise Finance Guarantee (EFG) scheme fell from £254 million in the first quarter of 2009 to £186 million in the same period in 2010.

Over the next three months, it fell to £149 million, attracting more concerns about the effectiveness of the scheme.

"SMEs need the government to act now to iron out the problems within the scheme and incentivise lenders to lend more," the Independent quoted Philip Monks, the chief executive of Aldermore bank, as saying.

"With so many SMEs being refused credit by the big banks, the sheer scale of decline in lending through the EFG scheme is a big concern," he added.

The EFG scheme is a guarantee facility for SMEs with the primary role of improving the availability of working capital through term loans and the consolidation of overdrafts.

Posted by Nicola Richards