In the 2008 Pre-Budget Report, the government announced that SMEs would be able to benefit from up to £4bn of EIB finance between 2008-2011. Thus far, participating UK banks have secured £1.4bn from the EIB, and approved £726m worth of loans for 2,769 small businesses.
EIB loans could prove beneficial for entrepreneurs eager to expand their business, as they are generally cheaper than other credit lines.
Indeed, as an AAA-rated financial institution, the EIB can raise funds on the capital markets at advantageous rates, which it then passes on to the SMEs through cheap loans.
“I want to encourage all businesses to get in touch with their local banks to find out if they can get access to this funding; it’s an easy process and certainly worth pursuing,” says Ian Pearson MP, the economic secretary to the Treasury.
For example, one business that benefited from a £600,000 EIB loan was Ambi Pharmacy, based in East Midlands.
“The EIB loan gave me the opportunity to expand my business,” says Ambi Pharmacy’s managing director. “The loan being very competitive compared to the market, and the funding being sufficient, I was able to open a second pharmacy and employ additional staff to help run it.”
Banks that are involved in the scheme include HBOS, Barclays, Close Brothers, Lloyds TSB, RBS, NatWest, Santander and Ulster Bank.
“We continue to urge non-participating banks to enter the scheme to make the loans available to more SME clients,” adds John Wright, national chairman of the Federation of Small Businesses. “Further promotion of EIB loans will continue to help the smallest companies through the recovery.”
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