Posted on 25.11.2013, by Rob Warlow
Latest figures released by the government show that bank lending made through the Enterprise Finance Guarantee Scheme (EFG) has again increased with lending reaching its highest level since 2010.
The figures reveal that banks offered loans worth £111 million to SMEs in the third quarter of 2013 compared to £96m in the second quarter. In terms of loans actually drawn down during this quarter businesses accessed £87m, a slight increase on the £84m lent out in the second quarter.
EFG is a scheme which allows banks to lend to SMEs who would otherwise not receive credit, by providing the banks with a government guarantee for 75 per cent of the loan value. Since May 2010, over 13,400 SMEs have been offered EFG loans with a total value of nearly £1.4 billion.
EFG is offered through 42 finance providers but in the third quarter figures Barclays Bank in particular was praised by consistently offering increased EFG lending since 2012. In the last quarter, Barclays offered nearly twice as much in loans to businesses compared to the same period last year, despite the number of loans offered only increasing slightly.
The increased usage has come off the back of Business Minister Michael Fallon writing to the Chief Executives of the five main high street banks in September 2012 to challenge them to increase their EFG lending after lending continued to fall significantly from the peak in 2009. The combination of ‘naming and shaming’ and a pick up in the economy has no doubt contributed to the increase in scheme usage.
You can find out more about EFG and how it works from here: ‘Understanding the Enterprise Finance Guarantee’.