Lending under the Government's flagship small business lending
scheme, the Enterprise Finance Guarantee (EFG) scheme has fallen by
a further 31% in the last three months, down from £144m in Q3
2010 to just £99m in Q4 2010 says Aldermore, the new British
bank. This is the lowest quarterly figure for the scheme since it
was launched.
Lending under the Government's flagship small business lending
scheme peaked in Q2 2009 and has been on the slide since then.
Lending through the EFG scheme is now just 39% of its level a year
and a half ago (£255m, Q2 2009).
Tony Smedley, regional managing director, invoice finance at
Aldermore, in the Midlands, said: "The trend in lending through the
EFG scheme is anything but healthy."
"The Government is very interested in helping small businesses
and I don't think they would want to see lending through the EFG
shrink any further. If lending through this scheme does not bounce
soon then perhaps the Government ought to see what it can do to get
it back on track. Making the scheme more attractive to either the
banks or to businesses would not be too expensive."
Aldermore is worried by the decline in lending under the EFG as
recent Bank of England data suggests that overall bank lending to
SMEs also continues to decline.
Smedley added: "The EFG is there to encourage banks to lend to
small businesses - if lending through both EFG and all other forms
of lending is in decline, where are SMEs going to get sensibly
priced funding? Whilst Aldermore is lending at record levels to
small businesses and we plan to keep expanding we cannot plug the
entire funding gap."
"All parts of the economy depend on a healthy small business
sector - it's a cliché but small businesses really are the
lifeblood of the UK economy. If funding for small businesses dries
up the entire food chain collapses. Our assessment is that there
are too many small businesses that have robust finances, good
management and sensible expansion plans that are being deprived the
capital needed to invest and grow their businesses."
Aldermore has more than doubled the amount of lending it
provides to small and medium sized enterprises (SMEs) in just a
year. At the end of 2010 the bank had outstanding loans to SMEs of
£410.2m; an increase of 107% on the £198.6m 12 months
ago.