smallbusiness.co.uk: Helping your business think big

Fund managers should be given a role to play alongside the high street banks in delivering the government’s £40 billion credit easing scheme support, says venture capital firm EV.

The UK-based fund manager, which invests up to £2 million in new or existing small businesses, says that while small businesses haven’t generally sought finance from venture capital firms in the past, they should now consider the sector as an option.

His comments follow George Osborne’s Autumn Statement this week in which he detailed the National Loan Guarantee Scheme, that aims to direct funds to small businesses through the high street banks.

EV chief executive Jonathon Diggines comments, ‘The £40 billion in loan guarantee support sounds great, however, we have already seen vast sums put into the UK banks’ coffers, through quantitative easing and previous loan guarantee schemes, and the tangible benefits for small businesses have been imperceptible.’

He adds, ‘From our experience, the take-up of loan guarantees by the banks has been low, despite their availability.’

The fund, which has offices across the UK, further believes that the banks will use the National Loan Guarantee Scheme to focus on larger, more established businesses with many small and medium-sized businesses (SMEs) not being considered for loans.

Diggines says, ‘With SMEs defined as having a turnover of up to £50 million, the concern is the banks will limit their lending to those at the top end of the scale and therefore a huge number of true SMEs will not be considered.’

The Chancellor announced on Tuesday that an initial £20 billion will be made available in the next two years through the loan scheme, but more than double that amount could be available in the future.

EV believes that small business support should be directed not just through the banks but ‘through proven fund managers who have the network and track record to show that they will not sit on the funds but can quickly put them to effective use’.

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