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Small Firms Loan Guarantee: Annual Report

Volume 694: debated on Wednesday 25 July 2007

My right honourable friend the Minister of State for Competitiveness (Stephen Timms) has made the following Written Ministerial Statement.

I am today laying a copy of the first annual report to Parliament on the operation of the small firms loan guarantee (SFLG) scheme. SFLG is the Government’s principal intervention in the debt market, designed to help small and medium-sized enterprises with viable business propositions but insufficient collateral to secure a loan for debt finance.

An independent review, the Graham review, recommended changes to modernise and streamline SFLG in 2004. Those changes were implemented from December 2005. The new form of the scheme focuses on start-ups and young businesses under five years old, simplifies the eligibility criteria and enables participating lenders to take all operational decisions regarding individual loans, provided that their normal commercial lending criteria but for the lack of security are met. BERR has been engaging strategically with lenders to gain a better understanding of how the scheme is being used. While it is too early to assess the full impact of the new form of the scheme on the debt finance gap, the annual report highlights initial indications of progress against each of the benchmarks set by the Graham review. Going forward, the focus now will be to continue to build strategic relationships with existing lenders to ensure that the full potential of SFLG is exploited and to extend the lender base to further broaden availability of the scheme. Copies of the report have been placed in the Libraries of both Houses.