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Reminder on bank lending scheme
West Yorkshire accountancy firm Watson Buckle is reminding small businesses looking to invest as the UK comes out of recession that the government’s Enterprise Finance Guarantee (EFG) scheme is still available, to help them secure lending from the banks.
The EFG, introduced last January, sees the government guarantee up to 75 per cent of loans to companies with an annual turnover of up to £25million, which are looking to borrow up to £1million.
It is intended to provide funds for otherwise viable businesses which have been unable to access the funds they need due to banks tightening their lending criteria.
In return, a premium equivalent to two per cent per annum on the outstanding balance of the loan is assessed and collected quarterly on behalf of the Department for Business, Innovation and Skills (BIS), which operates the scheme.
Watson Buckle managing partner Susan Sedgwick said: “This scheme was introduced at the height of the downturn, but it is due to continue until at least March 2011, making it a viable option for firms which were forced to batten down the hatches during the recession but now need to invest in order to re-stock and take advantage of future opportunities.
“Most UK lenders have signed up to the scheme, although there is no obligation to lend in every case, and we have heard mixed reports on how responsive some banks are, so it is always worth trying more than one lender.
“The forthcoming General Election could potentially have an impact on the scheme’s future, but it is unlikely any party will remove support for business that is already in place, and it may even be that it is ultimately extended for a second time, beyond next March.”
A recent report by Durham University into the effectiveness of the EFG found that 94 per cent of respondents said the loan had improved their business prospects, while 84 per cent said it had improved their prospects of survival.
For more advice on applying for a loan using the EFG, contact Watson Buckle on 01274 516700.