Pressure group’s concern over SME funding scheme
NORTH West business pressure group Private Sector Partners has raised serious questions over the impact of a key Government scheme to help cash-strapped small companies.
PSP, founded by the veteran businessman Len Collinson, claims the Enterprise Finance Guarantee scheme, launched in January to help credit-crunch hit SMEs, is dogged by problems and being hampered by a lack of trust between banks and small firms.
According to the Department of Business 2,059 small firms have now been offered loans collectively worth £186m under the scheme, which aims to see the Government provide £1bn of guarantees to support to £1.3bn of bank lending by March 2010.
Private Sector Partners, which representing more than 100,000 firms in the North West, said that while funding had been provide to a few firms, more needed to be done to tackle a breakdown of trust between businesses and banks.
PSP leader Mr Collinson said: “Businesses are still being turned down for funding under this vital scheme and do not understand why. Yes a small amount of funding is starting to come through and that is desperately needed. But this is the least you would expect with 26 lenders taking part in the scheme.
“The reality is that many banks are still not administering it properly or well. Moreover, there is still considerable bad feeling between small firms and banks. It should be remembered that these loans come with high charges.
“Some businesses are resentful of being branded high risk when they have a strong track record.”
Mr Collinson said he remained concerned that some banks are demanding cripplingly high levels of security and personal guarantees before they lend.
