Brown to help small businesses
Small businesses will be able to apply for larger loans from the Government after the Chancellor agreed to accept in full the recommendations of the Graham report into the Small Firms Loan Guarantee (SFLG).
There had been some speculation that Teresa Graham would recommend scrapping the SFLG scheme, but today she announced that she is proposing raising the eligibility level, introducing a three-year full trading age limit to focus the scheme on supporting high growth start up, and a reduction with the associated bureaucracy.
Under today’s recommendations, the lending ceiling would be raised to £250,000 per business with the turnover limit for eligibility raised to £5.6 million.
The SFLG scheme was set up in 1981 to help new and smaller businesses access finance. Under the scheme, the Government guarantees 75 per cent of a commercial loan for small firms that “have viable business proposals but which have tried and failed to get a conventional loan because of lack of security”.
Responding to the report, the Chancellor Gordon Brown said the Government would implement the proposals in full, saying: “Small businesses are the lifeblood of our economy – boosting productivity, creating employment and prosperity, and revitalising our communities. Access to finance is a vital ingredient in the growth of any successful business.”
He added that the new regulations will “ensure the future SFLG will maximize its impact on our enterprise agenda and helping those SMEs with greatest difficulty in accessing debt finance”.
Trade and Industry Secretary Patricia Hewitt commented: “The review marks another milestone for this extremely popular DTI support scheme, which has guaranteed over £3.8bn worth of lending to around 88,000 businesses over the last 22 years.”
She said another statement on the scheme’s future will made in the autumn pre-budget report after industry consultation, but added: “I can confirm that, in the event of a full Enterprise Capital Fund programme being launched, the Government will create a new public company to deliver our financial products for small firms – putting our support for enterprise on a commercial and market orientated footing.”
