Government-backed loans to firms total £580m

More than half a billion pounds worth of loans have been secured under a Government-backed scheme aimed at small and medium firms.

More than 5,840 businesses have acquired £580m in funding via the Enterprise Finance Guarantee Scheme (EFG), where the Government guarantees 75% of loans.

In total, as of 18 December, more than £1.04bn of eligible applications from over 9,200 firms have been granted, are being processed or assessed. More than 7,100 businesses have been offered loans totaling nearly £717m.

The Morning Advertiser has reported that licensees have had difficulty accessing funds through the initiative due to the reluctance of high street banks to loan to the sector.

Nevertheless, a new Government survey of 385 firms suggests those businesses that have secured EFG loans say it's a success.

For example, 94% said their business prospects had improved and 84% said it helped their prospects of survival.

Other benefits included improved cash flow, helping business growth, and job creation (60%).

Small Business Minister Lord Davies said: "These impressive results show the Government is providing real help to businesses when they need it, helping to secure jobs and give businesses the capital they need to invest and grow.

"The Enterprise Finance Guarantee has been welcomed by business and, following its recent extension, it will continue to play a vital role in encouraging enterprise and investment and driving productivity and growth throughout the UK economy."

At this month's Pre-Budget Report, the Chancellor announced EFG would continue for another year, enabling up to £500m of additional bank lending between 1 April 2010 and 31 March 2011.

EFG is available for "viable" firms with an annual turnover of up to £25m, looking for loans of up to £1m for a period of up to 10 years.

- What's your experience of the Enterprise Finance Guarantee Scheme? Email john.harrington@william-reed.co.uk or call 01293 610481.