More than 10,000 small and medium-sized enterprises (SMEs) have been able to access commercial loans and boost the economy thanks to a Government-backed scheme, a new study has shown.
The Enterprise Finance Guarantee Scheme (EFG) has added £1.1 billion to the economy since May 2010, with every £1 invested delivery £33.50 has been delivered, the report by Durham Business School has found.
It says freeing up funding has created 6,500 jobs and safeguarded more than 12,000. Business Minister Michael Fallon is now calling on banks to increase their lending after the proven success of EFG. He said: “Clearly the demand is there for this type of financial support so we must start to see an increase in take-up.”
With the Government acting as guarantor on 75% of small business loans – ranging from £1,000 to £1m – a large number of SMEs that would otherwise have inadequate security have been able to secure £1.04 billion to fund their businesses.
Other Government incentives to increase SME growth includes Seed Enterprise Investment (SEIS), which combines 50% income tax relief on share cost and capital gains tax exemption from their disposal; and start-up loans, a £112m scheme to help 18-30 year-olds start their own business.