In his first Budget, the Chancellor said the scheme, a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and a group of lenders, would be made available to more small- and medium-sized companies.
Currently only UK businesses that are less than five years old with an annual turnover of up to £5.6m can apply for a small firms loan. Seventy five per cent of the loan amount is guaranteed by the government.
Rhodri Ferrier, co-founder of natural men’s grooming brand Bulldog, says while it’s a positive announcement, “our practical experience is the scheme is difficult to access”.
He adds: “The scheme sounds very attractive when you hear about the idea of unsecured loans. But for us, it was much easier to raise money ourselves than jump through the hoops the banks had put in place.
“It just seemed to be slightly restrictive and cumbersome to access. We found we could go out and raise equity that was, in the end, more flexible than a loan.”
However, Loewy’s Charlie Hoult believes the extra cash will make some difference. “I think microfinance is a pretty central challenge to the UK economy," he says.
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