New research has shown that a government scheme designed to help thousands of smaller businesses has helped them access over £1 billion in loans in less than three years.
A study by Durham Business School found that the Enterprise Finance Guarantee Scheme (EFG) has helped more than 10,000 businesses access £1.04 billion of loans since May 2010.
The EFG sees the government act as guarantor on 75 per cent of individual bank loans between £1,000 and £1 million to small and medium-sized enterprises that do not have the adequate security for a normal commercial loan.
The Durham Business School study found that the EFG scheme has added £1.1 billion to the economy, and that for every £1 invested it has helped deliver £33.50. Researchers demonstrated that it has created 6,500 jobs, and safeguarded more than 12,000.
Business Minister Michael Fallon urged banks to increase their lending through the scheme. “Clearly the demand is there for this type of financial support so we must start to see an increase in take-up.
“I have already begun publishing EFG lending by each individual bank, because businesses should know which bank they are best off approaching and I will continue holding the banks to account until lending levels improve.”
Meanwhile, another government scheme – the £112 million Start-Up Loans initiative, which helps young people aged 18-30 start their own business – supported its 1000th entrepreneur in February.
Charles De-Souza secured £1,500 to grow Destined to Make It, an events management business specialising in youth engagement and development, which he founded with three partners.
Businesses backed by Start-Up Loans have all received help in putting together their business plan and pitch, have secured start-up funding and are being mentored as they start their businesses.