The government's flagship lending scheme to small businesses, the Enterprise Finance Guarantee scheme (EFG) has been praised by business groups for beginning to provide much needed funds for small firms.

The chairman of the SME council at the Confederation of British Industry (CBI) Russell Griggs predicted that the EFG is on course to hit its lending target of £1.3bn by the end of the scheme in March 2010.

"It [the EFG] is stimulating a lot more positivity in the marketplace," said Russell Griggs.

The Forum of Private Businesses have also been positive about the scheme, with chief executive Phil Orford praising the EFG and adding that it could be used as a model' for any future loan schemes between the government and businesses.