The argument that the government’s lending
programme for SMEs should be extended to asset finance has been
made again by a leasing company, in the wake of figures showing a
sharp drop in lending under the scheme.
Lending under the
Enterprise Finance Guarantee (EFG) programme has fallen 42%
between June 2010 and June 2011, according to data from
the Department for Business Innovation and Skills (BIS).
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Latest lending figures show that between April
and June 2011, the EFG offered to guarantee 919 loans worth £93.1
million to small businesses, down from a peak of £254.9 in same
quarter of 2009.
If that trend continues, the Government is
unlikely to reach the £600 million allocated for additional lending
under the scheme between 1 April 2011 and 31 March 2012, IT leasing
company Syscap has stated.
The EFG guarantees various forms of finance
including invoice finance, new loans, and re-financing of existing
loans, but excludes leasing.
The EFG’s exclusion of leasing finance may be
putting an artificial curb on demand for EFG loans, Syscap said,
adding that businesses may be postponing capital investment due a
shortage of finance.
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By GlobalDataPhilip White, chief executive of Syscap, said:
“Making lease finance more readily available would mean businesses
can make the investments they need now rather than postponing them
indefinitely. This would bring an immediate boost to the
economy and also have a longer-term impact on the competitiveness
of UK businesses.”
A BIS spokesman said that EFG-backed
lending in 2009-10 was “exceptional” considering that it coincided
with the height of the recession when banks were highly reluctant
to lend.
The EFG, which began in Janauary 2009, is
designed to enable additional bank lending to “viable” SMEs with a
turnover of less than £25m that lack collateral to secure a normal
commercial loan.
The government guarantees 75% of a loan. The
scheme will continue until 2014-15, and will provide up to £600m of
additional lending to around 6,000 SMEs in 2011-12 and, subject to
demand, over £2 billion in total over the next 4 years, BIS
said.
