the business ladder

Small businesses in the UK could get better access to funding with the government indicating its support for micro-lending to such companies.

Business and Enterprise Minister Mark Prisk, speaking to the Community Development Finance Association (CDFA), set out reforms to the Enterprise Finance Guarantee (EFG) scheme, to increase access for community development finance institutions (CDFIs).

From April 2011, the government will pay out on defaults of up to 20% of each lender’s EFG portfolio on the first £1m of loans. This is an increase on the current rate of 13%.

Mr Prisk also announced that he is issuing guidelines to CDFIs to help facilitate better use of current support and directly invited them to bid to the Regional Growth Fund, which will target regions that depend too much on the public sector.

“I want to encourage people from all backgrounds to start their own business”, he commented.

“Community development finance institutions are extremely important in supporting business in communities that need a boost in enterprise and economic growth.”

This comes amidst news that the coalition government is planning a  ‘Big Society’ Bank to support the growth of the social investment market and make it easier for social enterprises and businesses (including CDFIs) to gain access to capital. Mr Prisk invited CDFIs to work with the government as it develops the bank.

He added: “With changes to the Enterprise Finance Guarantee and our continued work on the Big Society Bank and Regional Growth Fund, new opportunities are opening up for CDFIs to increase their loan base. CDFIs are well positioned to make strong bids for RGF support in line with the objectives of the fund.”

 

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