SMEs EFG Lending hits new low

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). Says Phillip Monks:

 “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.” 

Phillip Monks says he is particularly disturbed 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.

Phillip Monkssaid;

 “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 are obviously not yet big enough to plug the entire funding gap.”