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Banks in dark on loan guarantee, say firms
Frontline bank staff are denying small firms loans backed by the government's £1.3 billion enterprise fund – because they have not been told how the scheme works. The Federation of Small Businesses yesterday said that some bank workers were not even aware of the existence of the Enterprise Finance Guarantee scheme.
But yesterday the FSB said its members had found that many bank workers did not know how the flagship scheme worked.
Stuart Mackinnon, spokesman for the FSB said: "We are hearing anecdotal evidence that people are going into their banks and in their branches, managers don't have any knowledge of the scheme or even when it's going to come in.
"Some small businesses have been really disappointed in recent months with how their relationship with their bank manager has broken down. At this time, it's more important than ever that firms get access to as much funding as possible."
Banks yesterday said they were in the process of briefing their staff on the scheme.
Ewan McCulloch, spokesman for Clydesdale, said: "It is a relatively new initiative, but we do have a communications programme to ensure that bank staff are familiar with schemes like this."
The FSB claim came after a newspaper reported yesterday that loans of only about £12 million had been issued under the scheme, which was launched by the Department for Business, Enterprise and Regulatory Reform on 14 January. It was claimed that Barclays alone had issued about £12m of loans, while Royal Bank of Scotland was "processing applications" but refused to say if it had sanctioned any loans.
Some banks yesterday said they had issued loans through the scheme, but refused to put a figure on their value.
Others said they were processing applications and expected to increase loans to SMEs over the coming months.
Lloyds TSB said yesterday that while it had been one of the first banks to use the scheme, its relatively strong financial position meant it did not need the government guarantee for as high a proportion of its loans as other institutions.
Bank of Scotland said it had not yet processed any applications under the loan scheme amid the takeover by Lloyds TSB – but pledged it was putting the finishing touches to the product and expected to roll it out next month.
Clydesdale said it had received a high number of applications of which "some" had been approved.
The scheme, which is restricted to companies with a turnover of up to £25m, guarantees bank loans for amounts between £1,000 and £1m, paying the bank 75 per cent of the loan if the company defaults and is unable to make its repayments.
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