Enterprise Finance Guarantee Scheme Extended
Enterprise Finance Guarantee Scheme now lending to businesses and social enterprises.
Business Secretary Lord Mandelson yesterday announced changes to the Government’s Enterprise Finance Guarantee Scheme to help improve lending to businesses and social enterprises in disadvantaged areas. The announcement came as he jointly chaired a social enterprise summit with Liam Byrne.
The changes will provide extra support to Community Development Finance Institutions by allowing them to access bank loans, worth up to £20m, through the EFG scheme. Unity Trust Bank, in response to this change, also announced yesterday that it is making an additional £5m available for onward lending by CDFIs.
Community Development Finance Institutions, provide vital financial support to businesses and social enterprises which are unable to access bank lending due to the higher risk associated with supporting the disadvantaged groups and communities to which they lend.
Secretary of State for Business Lord Mandelson said:
"Community Development Finance Institutions play an extremely important role supporting small businesses and social enterprises in disadvantaged areas.
"In the current economic climate, these institutions are an increasingly important source of finance and investment for small businesses and social enterprises that have been unable to access finance from banks. These changes to the Enterprise Finance Guarantee Scheme will enable more of these institutions to raise additional lending worth up to £20m."
Minister for the Cabinet Office Liam Byrne said:
"Social enterprises, businesses that make a difference as well as a profit, can help Britain emerge from this recession stronger.
"I warmly welcome Lord Mandelson’s announcement as a step that will help social enterprises flourish. Already over 60,000 social enterprises with a combined turnover of around £27bn are finding innovative solutions to the toughest social and environmental problems.
"The Government is holding a summit with social enterprise leaders to reaffirm social enterprise at the heart of government thinking."
The Enterprise Finance Guarantee Scheme currently has more than £344m of eligible applications from 3,071 firms that have been granted, are being processed or assessed. And 2059 firms have now been offered loans totalling over £186m.
To help social enterprises make the most of the new investment that will be available the Cabinet Office, in partnership with the National Endowments for Science, Technology and the Arts (NESTA), yesterday announced a year long Access to Investment Programme. This programme will aim to find ways for social enterprises to gain the advice and support they need to access new forms of growth finance.