SME Loans : Is the Government's Small Firm's Loan Guarantee Scheme the Answer?

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Is the Government's Small Firm's Loan Guarantee
Scheme the Answer?
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• The UK has the most prolific and successful SME
  business community anywhere in the world. The
  vast majority of the UK's wealth is generated by
  SME businesses.
• However, they pay the highest taxes whilst
  struggling with the ever growing burden of red
  tape, regulation and lack of help and
  information.
• Large corporations have the luxury of expensive
  and highly skilled advisors that help them
  minimise their tax positions, move profits
  offshore and around complex webs of corporate
  structures. The government seem to be happy to
  help the large corporates whilst leaving the SME
  community to fend for itself.
• Whilst the small businesses continue to fight
  for survival the largest of corporations, both
  here and outside the UK seem to be on a head on
  collision with disaster. It is not the SME's that
  have caused us to be in the current climate but
  they are the ones, along with the general public
  who are feeling the pain the most.
• It has become clear in recent months that the
  government does realise that it is down to the
  SME community to trade the UK out of its present
  precarious position and would dearly like to see
  that happen.

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• Aside from the regulatory woes we all suffer, the
  largest hindrance is the lack of financial
  support. For many years SME's have obtaining
  funding, often from banks and regularly utilising
  the government led Small Firm's Loan Guarantee
  Scheme (SFLG).
• The SFLG scheme is a scheme whereby if a bank
  subscribing to the scheme, which most do, decides
  to make a business loan of up to 250,000 based
  on the merits of the application, but there is no
  security available from the company directors,
  the SFLG scheme, managed by BERR (formally the
  DTI) can be used to guarantee 75 of the loan for
  the bank, with the bank taking the remaining 25
  as unsecured.
• Over recent years there has been an increasing
  reluctance by the banks to work with the scheme.
• Lending has moved from 90-100 of requirements
  to matched funding whereby the business owners
  are expected to personally inject at least half
  the requirement into the company as share capital
  and to not expect to withdraw that money during
  the life of the SME loans. In more recent times
  it has become more and more difficult to obtain
  approval on such loan applications.

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• In any situation there is a positive for every
  negative. There has been a dramatic rise in the
  number of businesses looking at business angel
  funding options.
• Growing awareness of this source has led to a
  large increase in activity in this sector.
• Even in these hard times there is a large base
  of both private and corporate investors out there
  that are prepared to inject capital in return for
  shares in businesses.
• In many cases this can be much more beneficial
  for businesses that could benefit from additional
  skills and experience rather than just cash.
• Whilst there will always be a demand and
  necessity for bank funding it is encouraging to
  see the SME community increasingly supporting
  itself with private investors taking interests in
  other SME businesses and helping them grow.
• Hopefully this will continue to grow and prosper
  and with encouragement, the government and
  banking sector will eventually catch up and get
  back in the game. They most certainly should.
• Source http//ezinearticles.com/?Is-the-Governmen
  ts-Small-Firms-Loan-Guarantee-Scheme-the-Answer?i
  d1757515

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