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The FPB believes that the Small Firms Loan Guarantee Scheme (SFLG) should be available to established smaller businesses and not restricted to just start-ups.
OVERVIEW
Over the course of the last 20 years, the FPB has worked to improve the relationship between small businesses and the banks. Every two years, we produce a Bank Survey which is the most comprehensive piece of research into the relationship between banks and business in the UK.
We have been proud to encourage and help foster a positive working relationship between banks and smaller businesses. However, while much has been done to smooth the path for companies wishing to borrow money, there is still room for improvement and we believe that the changes to the SFLG are a regrettable mistake.
The Scheme provides loans of between £5,000 and £100,000 for businesses with a trading record of less than two years, with the amount increased to £250,000 for older businesses.
A review of the Scheme by Teresa Graham, announced in October 2004, was broadly welcomed by the FPB. The reduced bureaucracy, coupled with an increase in the turnover thresholds for qualifying businesses, was a welcome measure.
However, the recommendation that businesses with three years' full trading or more will no longer qualify for the Scheme is regrettable. The FPB's Bank Report 2004 demonstrates that those businesses over the age of five years are increasingly being asked for personal collateral when applying for finance.
There is sufficient evidence to suggest this recent recommendation should be removed.
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