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Lending under finance guarantee scheme plummets


Lending under the Enterprise Finance Guarantee scheme (EFG) has fallen to a new low, latest figures reveal.


According to a new study by specialist bank Aldermore, the value of loans offered under the Government’s flagship initiative dropped by 11% in the first three months of 2011.


It found that £92 million of loans were offered under the EFG during this period – down from £103 million in the final quarter of 2010.


The bank said this meant lending under the EFG scheme has plunged by 36% in two years.


Launched in 2009, the EFG facilitates additional bank lending to viable SMEs which are unable to secure a normal commercial loan.


Under the scheme, which is set to continue until 2014/15, the Government guarantees part of the loan, reducing the risk of losses for the lender.


Commenting on the findings, Aldermore Chief Executive, Phillip Monks, said: ‘Lending through the EFG is now less than half of what it was at the peak.


‘If small and medium-sized businesses cannot get funding the UK’s economic recovery is not going to be sustainable.’