The government has guaranteed fewer loans to small business this year than it did the year before, and is significantly under-budget in the amount it has guaranteed, despite repeatedly pledging to increase lending to the sector, the Telegraph Business reports today.
Businesses have received a total of £177.8m through 2,360 loans in the year to March 31 2009 through the Small Firms Loan Guarantee and its replacement the Enterprise Finance Guarantee (EFG) (introduced in January), the paper reported. The total amount of loans guaranteed the year before came to £205m.
But perhaps more alarming is that the government’s budget for the period to March 31 this year was £360m (more than double the amount that has actually been guaranteed), which then got raised to a huge £1.3bn in January – more than seven times the amount that was actually guaranteed.
A spokesperson from the Business Department said the report the Telegraph had taken the figures from did not account for all government support for business, which, the spokesperson said, actually totalled £3.8bn at March. "Nearly £546m of eligible applications from over 4,850 firms that have been granted, are being processed or assessed and, over 3,500 businesses have been offered loans totalling over £346m,"the spokesperson said.
But that beggars the question why would the government release figures that show it in such a negative light? Why wouldn’t they release these much more favourable figures, if the EFG was in fact having such great effect for small businesses? We smell a rat, and are more inclined to believe the Telegraph Business’ take on this than a government spokesperson’s.
Our hopes were raised when we heard Pater Mandelson and Shriti Vadera (the small business minister) consistently explain how much the government would be doing for small businesses and how much money they would free up for them earlier this year. Even this weekend Mandelson wrote an introduction to a Sunday Times quarterly business supplement that assured readers the government was doing loads to help small businesses by encouraging bank lending.
But it seems, both from these figures and from accounts we’ve heard from a whole host of small business owners and entrepreneurs, that, once again, the government simply isn’t following through on its promise – arguably the most crucial one to small business owners. We hope seeing the Telegraph’s story today shakes it up enough to realise it can’t get away with it any longer, and forces it to enable the loans that many businesses’ lives depend on to the full amount budgeted for.