Businesses unaware of government loan scheme

Nine out of ten businesses do not realise that their banks offer access to the government’s Enterprise Finance Guarantee scheme, a new survey has revealed.

In a poll of 250 firms, the British Chambers of Commerce (BCC) found that 90 per cent were not aware that the scheme was available to them.

Just one of the firms reported that it had been offered a loan using the scheme.

David Frost, the director general of the BCC, said: “A lot more needs to be done to raise awareness of these schemes. It is business that will drive the UK out of recession and it is vital that banks support companies through what is an extraordinarily difficult time.”

The survey also showed that many businesses are continuing to struggle to secure financing from their banks.

In the last six months, of the businesses that had actually attempted to get a loan, some 31 per cent were turned down, while 20 per cent said that the bank offered them a loan that did not meet their request.

One fifth of respondents said that banks were requiring more information about the business before they were willing to lend, and 12 per cent said that it was taking longer for decisions on loans to be made.

Overdraft and credit facilities were also becoming more stringent, the survey concluded.

Of the businesses that had an overdraft (60 per cent of the sample), 30 per cent had seen an increase in the fees charged for the facility over the last six months. Some 13 per cent said that there had been a reduction in the amount of credit that their banks were willing to offer.

At the same time more and more businesses are seeking credit or loans. Over a quarter of businesses (27 per cent) reported that their need for credit or loans increased compared with the previous year.

Late payments, too, were proving a problem for many firms. Six out of ten businesses experienced cash flow difficulties caused by unpaid invoices, and 45 per cent of businesses found that the settlement of bills was taking more than a month longer compared with a year ago.

Mr Frost added: “The government needs to address the growing pressures on cash-flow within businesses, even beyond relationships with banks. This means scrapping the planned rise in National Insurance contributions, calling time on harmful extra regulation and freezing the national minimum wage.”