UK independent finance provider Syscap has called on the
government to open up lending schemes such as Enterprise Finance
Guarantee (EFG) and Funding for Lending (FLS) to non-bank asset
finance providers to boost small business lending.
The specialist IT lender pointed to the
continued fall in EFG lending, despite the government exposing the
programme to larger businesses in January, as evidence the scheme
was failing.
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The value of loans offered by the scheme in
the first six months of 2012 fell 10% year-on-year and was also
down on the previous six months.
Syscap’s chief executive Philip White said
the lack of government initiatives aimed at increasing lending to
smaller businesses was proof that the government has “all but given
up”.
White suggested the problem could be
resolved by offering providers of asset finance to SMEs the same
limited guarantees it offers to banks under the EFG or the low cost
funding being provided to banks under the FLS.
White said: “It seems like all the focus
has been placed on the Funding for Lending scheme but of course
that does not require banks to increase lending to small
businesses. Nor does the Funding for Lending scheme incentivise
banks to lend to smaller businesses or even bother setting targets
for lending to small businesses.”
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By GlobalData“We think increasing funding to SMEs is too
important a problem for the government to turn its back on. They
need to start looking at a broader range of options – for example
incentivise funding for small businesses through leasing. Leasing
is the one of the few areas of the small business finance market
that is growing,” he added.
White highlighted data from the Finance
& Leasing Association which showed asset finance businesses has
increased 12% over the last 12 months to £20.5bn, while bank
lending has fallen 3% over the same period.
White’s comments echo those of ING
Lease UK chief executive Chris Stamper who, in a letter to
Leasing Life, welcomed the end of the small
business-specific National Loan Guarantee Scheme but said the FLS
would need to be open to all lenders to better stimulate
lending.
