Green Light For Borrowing Now In Sight
Craig Pawson on government backed lending
THE last few years have been difficult for small businesses and particularly those in the construction sector, but Government-backed lending could make a difference.
The challenge for small businesses is to meet customer demand and deal with increasing material costs.
Reduced bank lending has limited opportunities for growth and employment. But now there is the Government-backed Enterprise Finance Guarantee (EFG). Despite its launch in 2009, many still don’t understand the benefits of the EFG scheme. Designed to help small businesses access finance, the EFG recently reported that for every £1 spent the return for the economy would be £33.50.
Over 8,500 jobs have been created by the investment, as well as saving 12,375 others. This translates into 1.8 jobs retained per business currently using the loan. News that end-users are investing more in their properties is good news for flooring contractors. The right funds and tools can help them take advantage of this situation.
According to recent reports, up to 80% of EFG users were previously unable to secure loans through conventional bank lending, due to lacking sufficient collateral. The government’s backing makes it easier for businesses that lack credit history to obtain approval to secure loans.
Many flooring contractors are skilled in particular areas and never had the chance to branch out into different fields.
This scheme provides funds to cover extra training which can expand your existing offer. For example, flooring contractors could begin offering installation and maintenance on decking.
This would allow them to provide both interior and exterior flooring. It may also make it affordable to take on additional staff and trainees to meet customer demand.
Unlike many loans which require additional guarantees and safeguards, the EFG scheme is available for start-up companies, allowing people who are struggling to secure funds to become independent. The Government’s Small and Medium Enterprise Scheme is also applicable to qualifying people, allowing funding to be secured at more competitive rates for new businesses.
What does EFG provide? Loans available via EFG vary from just £1,000, to a maximum of £1m. From a minimum term of three months to 10 years, the loan is accessible on either a short or long term basis.
As part of the scheme, potential candidates can also apply for multiple loans from different banks, so long as it does not exceed the overall limit. This allows a business to increase its borrowing if needed at a later stage.
Any flooring contractor thinking about this option should be mindful of their credit rating, as additional loans will bring elements that may impact on your future credit rating and borrowing potential.
The business minister Michael Fallon recently explained that the ‘EFG Scheme was introduced in response to the credit crunch, and has remained in place to help tackle the difficulties small businesses face in accessing finance from banks.’
Many options are available, so anyone eligible should consider how the scheme could benefit them in different ways. Working in a growing market, with customers looking for ways to change and improve their homes and properties, the current funding initiatives provide the opportunity to utilise and expand current skills to provide more choice for clients.
For a hard flooring specialist, it may be useful to learn other crafts and understand soft flooring solutions, and likewise, for contractors focussing on one material, the new funding will allow you to invest in training, or even employ people from another discipline to supplement your current portfolio of services.
To learn if you are eligible for the Government-backed loan system, or for information on services available, check it out online and search for the Enterprise Finance Guarantee provisions. CFJ www.gov.uk Craig Pawson is Osmo’s wood and finishes specialist
T: 01296 481220
This article has been reproduced from the Contract Flooring Journal website. You can find them at the www.contractflooringjournal.co.uk.