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November 29, 2013

Banks have "upped their game" says Cable

Banks have "upped their game" says Cable

The latest Enterprise Finance Guarantee (EFG) scheme lending figures show banks offered loans worth £111 million to SMEs in the third quarter of 2013, the most since 2010.

The improvement suggests that banks have "upped their game" according to business secretary Vince Cable.

EFG is a demand-led scheme that allows banks to lend to SMEs that would otherwise not receive credit, by providing the banks with a government guarantee for 75% of the loan value. Since May 2010, over 13,400 SMEs have been offered EFG loans with a total value of nearly £1.4 billion.

Vince Cable said: "The EFG scheme is making a vital contribution and businesses needing finance should take heart that the banks seem to have upped their game."

EFG-supported lending is available through 42 finance providers, including all of the main high street banks. Some banks have performed particularly well with Barclays offering nearly twice as much in loans to businesses in the past quarter compared to the same period last year.

Business minister Michael Fallon wrote to the chief executives of the five main high street banks in September 2012 to challenge them to increase their EFG lending after lending continued to fall significantly from the peak in 2009. This was despite the Government, in partnership with the banks, making a number of changes to the scheme to make it more flexible and easier to access.

The EFG is one of the lending schemes that has been brought under the new British Business Bank, which is being set up as a government-owned economic development bank.

Vince Cable said: "There are long-standing problems with the finance markets which need addressing, and that is why I have created the British Business Bank. We need a much more competitive and diverse market, which businesses of all sizes can have confidence in and [which] helps build a stronger economy."

John Allan, national chairman of the Federation of Small Businesses (FSB), said: "To maintain the momentum, the FSB continues to press the Government to look at how the EFG can spread its scope, such as making the scheme more flexible for alternative financiers and community development finance institutions."

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