Value of loans offered by flagship small business lending scheme falls to record low

11 March 2019

  • Small businesses need finance to tide over Brexit cashflow difficulties
  • Just £55.6 million offered to small and medium sized businesses in Q4 2018 – down 78% from peak of £255m in Q2 2009

The value of bank loans being offered to small and medium sized businesses via the government’s flagship small business lending scheme has fallen to a record low, says Funding Options, the online business finance marketplace.

Loans offered to small businesses via the Enterprise Finance Guarantee (EFG) scheme totalled just £55.6 million in Q4 2018, a fall of 2.2% on the same period in 2017*, and down 78% from its peak of £254.9 million in Q2 2009 (see graph below, 1).

Many small businesses may need extra funding to deal with the Brexit-related volatility in orders and payments from customers. Some businesses’ clients are holding off on making non-essential purchases to preserve cash and that is having a knock-on effect amongst their suppliers.

Funding Options says that more needs to be done to help ensure businesses who want to take out extra finance to cover any Brexit-related cashflow disruption are able to do so. Small businesses should be made more aware of schemes such as the EFG, as well as other alternative finance options that are available.

A lack of funding to help cover cashflow issues is one of the factors contributing to the increasing number of businesses entering insolvency. In 2018 17,439 businesses became insolvent, a five-year high (2).

The Enterprise Finance Guarantee scheme was launched in 2009 to help small and medium sized businesses access bank lending following the credit crunch. The scheme provides loans to businesses that don’t have enough security to meet traditional lenders’ normal requirements. The government provides a guarantee worth 75% of the loan to lenders to underwrite their risk.

Conrad Ford, CEO of Funding Options (, says: “The EFG was a successful concept when it was launched but it is now having less and less of an impact.”

“The EFG was a saviour of many small businesses during the last credit crunch. Brexit represents a fantastic opportunity for this great scheme to come into its own once again and ensure that shortfalls in cash flows and gaps in lending can be covered up”

“Brexit may go off without a hitch but if not, it would be sensible to line up emergency funding for small businesses.”

“It would be great to see more small businesses aware of the benefits of EFG funding can bring.”


The value of loans offered to small businesses by the Enterprise Finance Guarantee has dropped to a record low of just £55.6m


1) Analysis of Enterprise Finance Guarantee statistics

2) Year to December 31 2018, Insolvency Service Statistics