Businesses demand funds reach firms quickly
Business groups have warned that funds from the European Investment Bank’s (EIB) £4–billion support package must reach small firms immediately to be of benefit.
The cash is part of a £24–billion emergency loan package to enable banks to help business customers through the financial crisis, and will be made available by the EIB through high–street banks over the next four years.
The EIB has said its loans can be used to support a wide range of investment or expenditure necessary to help a small business grow. All independent firms with fewer than 250 employees will be eligible to apply.
The Federation of Small Businesses (FSB) expressed concern that the funds may not be available until 2009, and urged the government to use Regional Development Agencies (RDAs) to get the money to where it is needed most on a local level.
Under the FSB’s proposal, funds would be disbursed through RDAs immediately, making £1 billion available to small firms straight away.
“Small businesses are in desperate need of new funds,’ said an FSB spokesman. ‘One in three has had problems accessing credit from the banks.”
FSB national chairman John Wright added:
“Small businesses need a solution now. Over 80% of small businesses use the four major banks, yet only one – Barclays – currently supplies EIB finance. We need to be assured that this money will actually filter down to small businesses.”
The British Chambers of Commerce (BCC) welcomed the extra financial support, but said guarantees were needed to make sure that the funds reached businesses on the ground. BCC director general David Frost said:
“The Government must ensure that accessing the support is as simple a process as possible. The last thing small businesses need is a headache trying to apply for a loan.”
Responding to the criticism, an HM Treasury spokesman confirmed that the government was working quickly with the EIB to release funding, and that several other high–street banks had already applied to administer the finance, including Alliance & Leicester.
“Things are moving forwards and the Government is very keen that there is no impediment to progress. Clearly each bank will have to assess credit worthiness based on individual circumstances, but in terms of making the finance accessible to SMEs, there will be a bigger pool of money and companies with a good track record should be in a good position to benefit from the fund.”
For more information on obtain credit for your business, read our article on finance and money.