EFG cash cow for banks
Jan 04 2010
“EFG: money spinner for banks”
Banks are charging too much in administration charges and interest rates under the government’s Enterprise Finance Guarantee scheme, say small businesses.
According to research from Durham University, the average administration fee charged by EFG lenders is £2,430, with interest rates set at around 5.9 per cent.
Phil McCabe, spokesperson for the Forum of Private Business, says: ‘Interest rates are at artificially high levels and are deterring businesses from borrowing. Banks need to start playing ball by making finance more affordable and assessing businesses credit worthiness on a case-by-case basis.’
Of the 385 businesses surveyed, two-thirds say they are broadly happy with the scheme, although only 26 per cent are satisfied with the amount charged in administrative fees.
According to the Bank of England, access to credit has not improved for smaller firms over the last three months, despite larger corporations reporting an easing in lending.
In the Pre-Budget report it was announced that the EFG is to be extended for a further 12 months until March 2011.