The Government’s Enterprise Finance Guarantee (EFG) scheme, received a £20m injection to enable social enterprises struggling for funds to have easier access to much needed finances which could help keep their businesses afloat.
The Government has said that it would guarantee bank loans worth a total of £20 million to Community Development Finance Institutions (CDFIs) through the EFG scheme – freeing up money for CDFIs to lend to social enterprises.
Introduced in January, the EFG scheme provides UK banks with a Government-backed guarantee that their small business loans will be repaid in order to encourage them to lend more to small firms.
Speaking at the Social Enterprise Summit in London on 12 May, the Secretary of State for Business, Lord Mandelson, explained: “CDFIs play an extremely important part in supporting small businesses and social enterprises in disadvantaged areas. In the current economic climate, these institutions are an important source of finance and investment for small businesses that have been unable to access finance from banks.”
Community Development Finance Association chief executive, Bernie Morgan, said that the criteria businesses need to meet to successfully apply for finance varied between CDFIs. “However, most lend to firms that cannot obtain finance elsewhere and have social objectives at their core,” she said.
Other announcements at the Social Enterprise Summit included the creation of a Ministerial Working Group to improve social enterprises’ access to public sector contracts, and the publication of a Guide to Social Return on Investment to help social enterprises explain their value to potential investors.