Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

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Thursday, June 11, 2009

Government loan guarantee scheme

There is constant press coverage about the difficulties smaller business are facing at present with obtaining credit especially from the banks. I have commented on it here before.

One of the Government's key initiatives introduced earlier this year to help this is the Enterprise Finance Guarantee ("EFG") scheme, which replaced the good old Small Firms Loans Guarantee Scheme ("SFLG") earlier this year.

The headlines suggested that this would inject £1.3bn into smaller businesses by the Government guaranteeing to the banks 75% of the loan, with the balance supported by whatever means the lending bank felt was appropriate. However a spokeswoman from the Department for Business Enterprise and Regulatory Reform ("BERR" - the old DTI) said recently that only £230m had been lent through the scheme so far. We hear many stories about the difficulties of getting these loans and the often unrealistic demands placed on lenders by the banks. There also appears to be a huge inconsistency in approach and understanding by the banks.

It certainly seems not to be the great salvation that the Government would have us believe.

At the end of the day, if you want cash from a bank it all comes down to the quality of your proposition. No scheme it seems is going to make that any easier. A good business plan, supported by realistic assumptions and financial forecasts is a good start point. If you need any help get in touch

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