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08.07.09 | Startups Soar in Slump
The Enterprise Finance Guarantee (EFG) was launched by the Government in January 2009 to assist small businesses currently struggling to secure bank loans and finance.
The Government launched the scheme in the current economic climate in order to help jump start bank lending to businesses. The Government is offering a guarantee of up to 75% of the value of loans made to small businesses to a maximum of £1million for up to 10 years. The guarantee is on offer to small businesses with a turnover of less than £25million.
The guarantee can be used to guarantee new loans, refinance existing loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs. Most businesses in most sectors will be eligible for the scheme. However, rules exclude businesses in the agriculture, coal and steel sectors.
Many high street lenders are offering the guaranteed loans including Barclays, HBOS, HSBC, Lloyds TSB and RBS/Natwest. The Federation of Small Businesses has found though that many bank managers were not even aware that the scheme existed and so small businesses were missing out on the opportunity.
The Enterprise Finance Guarantee Scheme is running until 31 March 2010.
Startups Soar in Slump
Is there a positive side to the economic downturn for some? Gerry Rooney, Senior Partner at mosshaselhurst solicitors believes that an increasing number of those made redundant during this recession will be seizing the opportunity to set up businesses for themselves.
"In true entrepreneurial spirit, I think some people will try to turn a negative into a positive, in many cases using redundancy payments to finance business startups. The credit crisis is providing the catalyst for change. People with dreams of going it alone are taking advantage of their new found freedom and the opportunity it offers," Gerry explains.
Recent figures from Companies House support the suggestion. More than 21,000 people established new businesses last December, compared to 20,000 new start-ups in December 2007.
"Irrespective of the economic situation, the UK has always enjoyed high business startup rates," continues Gerry. "It is relatively straightforward to set up a business
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