Small Firms Unaware of Government Financial Support
More than half of small businesses are not aware of financial schemes set up by the Government to help them, according to new research by the Asset Based Finance Association (ABFA).
In its survey of more than 2,000 small businesses, 56 per cent revealed that they had not heard of the Enterprise Finance Guarantee scheme (EFG), Working Capital Guarantee Scheme or the Capital Enterprise Fund – all of which have been developed by the Government to provide financial support to small and medium-sized businesses.
Small firms struggling in the recession could be at higher risk of financial failure if they were not aware of the different initiatives available, said ABFA chief executive, Kate Sharp.
“Over the last few years, the Government has stepped up to support UK small businesses through various schemes,” she said.
“Unfortunately, there is a severe lack of understanding among this group about what financial support is actually out there. If they don’t know about the schemes, how can the Government help them?”
However, a spokesperson for the Department of Business, Innovation and Skills (BIS) denied that lack of awareness was a problem for small firms, and said there was a “huge” amount of information available.
“Not only are there more schemes out there to help small businesses, but dedicated Government websites, Business Link and even trade bodies like the Federation of Small Businesses and the British Chambers of Commerce all do an excellent job in delivering targeted information to businesses, ” she said.
On average, one in five businesses were likely to access Government-backed financial support, she added, so the level of awareness amongst small businesses revealed by the survey was “quite high”.
One of the schemes introduced to support small and medium-sized enterprises, the EFG was launched in January this year, and replaces the Small Firms Loan Guarantee. It assists businesses with a turnover of up to £25 million, with loans of up to £1 million, of which 75 per cent will be guaranteed by the Government and 25 per cent provided by the banks. Unlike the SFLG, the EFG can be used to cover debt.
Also launched in January this year, the Capital Enterprise Fund helps viable businesses that want to give up equity in their firm to release funds. The fund is intended for businesses with growth potential, and is not a rescue facility for struggling firms.
The £10 billion Working Capital Guarantee Scheme was brought in to provide banks with Government guarantees on working capital credit lines for businesses, to prevent withdrawal or reduction in credit.
For further information, go to the BIS website.