Two new government schemes designed to improve access to funding for SMEs should help small businesses to grow.
The Funding for Lending Scheme (FLS) and the Enterprise Finance Guarantee (EFG) are two initiatives aimed at helping small businesses secure the funding they need at a price they can afford.
Several major high street banks have already opted into similar schemes and more are sure to follow. Now not only can businesses save money with price comparisons on sites like Make It Cheaper, but they can look to the future secure in the knowledge that there will be funding for growth projects.
The EFG was established in 2009, and aims to improve access to funding to eligible small businesses who may not be able to offer anything as security. It supports businesses wanting to expand, begin a new project or buy new equipment or property, and also helps out those wishing to buy a new business altogether.
The FLS is slightly different – participating banks will receive government funding that will be directly passed on to the consumer as a reduction in interest rates. Loans taken out under this scheme will only be available to eligible SMEs, not to larger corporations or individuals. This scheme was launched earlier this year.
The government has also unveiled plans to start up its very own bank aimed directly at providing financial assistance to small and medium businesses. It is hoped that the bank will be able to secure enough private sector support to be able to open up £10 billion in loans to small businesses.
These loans will be offered with lower interest rates, more flexible repayment options and lower minimum amounts than most regular business loan packages. It will be possible to take out a loan without security based on a comprehensive plan of future earnings.
The hope is that if smaller businesses can access the funding they need to grow then the British economy will not only be strong but also diverse.
Traditionally, business loans packages were aimed at large corporations and not at the independent side of the market. These new schemes should aid British businesses in thriving and pushing forward into the new year.