Government Enterprise Finance Guarantee scheme sees dramatic drop

Syscap, the IT finance provider, has said that government lending through the Government Enterprise Finance Guarantee scheme has greatly fallen off. Loan values from the government have fallen from over £720 million to over £430 million from the previous twelve months. Information on the latest quarter has indicated that the loan values are continuing to fall.

According to Syscap, the figure for the next year also look as if they will be disappointing and that the targets that have been set by the government are unlikely to be matched. £600 million has been allotted for lending in the next year but this will not be enough to meet targets.

Syscap argues that one of the reasons for the lack of lending is that the scheme does not including leasing finance. This is an important financing method for small to medium sized enterprises and its exclusion is a problem for them. Philip White is the chief executive for Syscap and has said, “Lending in the last two quarters is very disappointing and the Euro zone crisis is making businesses cautious. This means there is a great need for the government lending scheme and it needs to be made as effective as possible.

“Expanding the scheme to allow for lending for leasing would be a valuable step in ensuring that small businesses are able to create the jobs that are needed and give a boost to our economy.” The scheme currently means that 75% of loans that a small business takes the government will guarantee.