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SMEs 'unaware of funding lifeline'

Published On 20 April 2007 at 08:54:47

Many small and medium-sized enterprises (SMEs) are unaware of a financial lifeline available to them, according to new research.

Venture Finance found that 37 per cent of SMEs did not know about the Small Firms Loan Guarantee (SFLG) scheme. However, in 2005, 51 per cent of small businesses knew about it.

The SFLG scheme is a project, backed by the Department of Trade and Industry (DTI), which allows firms to raise finance after they have exhausted other avenues.

Government figures back up Venture's findings that SMEs are ignoring SFLG. Just £225 million was lent to SMEs in 2006 through the scheme, compared to £481 million in 2004.

"Because the SFLG is only open to businesses that fulfil certain criteria, high street banks are showing a reluctance to promote this as a viable option, preferring instead to push clients towards more generic, and usually more expensive, products, such traditional overdrafts," explained Steve Websdale, director of Venture Finance.

"I would urge companies to seek advice from an independent financier or accountant who will be better placed to provide unbiased guidance on funding options."

SMEs can obtain SFLG funding from a number of high street lenders, including the Bank of Scotland, Barclays, HSBC and the Co-operative Bank.

 

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