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A flagship scheme designed to encourage banks to lend to smaller businesses is said to be on course according to BBC News.
Speaking on the Enterprise Finance Guarantee Scheme, their aim is to get banks to agree to £1.3bn worth of loans, with the government offering them the guarantee of a 75% loan to value rebate should borrowers default.
A flagship scheme to encourage banks to lend to small businesses is on course despite criticisms, according to the minister responsible.
The Enterprise Finance Guarantee Scheme aims to persuade banks to agree £1.3bn worth of loans.
The government is offering to pay the banks 75% of the value of the loan if the borrower defaults.
Critics say many businesses are still unaware of it and company directors are having to guarantee the loans.
Small businesses minister Shriti Vadera told BBC Radio 4's Money Box the government is on track to persuade the banks to loan the money it wants.
"We've now hit the rate that we need of eligible applications every week which means the scheme is completely on course," the minister said.
"We've currently got £115m of eligible applications, about £30m a week."
Nevertheless, a British Chamber of Commerce survey of 250 UK firms discovered 90% of those questioned did not know about it.
It only found one company which had actually been offered such a loan.
Others who have been offered loans object to having to offer 100% directors' guarantees.
Essex entrepreneur John Barton applied for an Enterprise Finance Guarantee backed loan for his health products business in February to help his cash flow.
As the government guarantees 75% of these loans, he hoped his bank would be willing to lend to him on favourable terms.
When he applied, he was disappointed to hear that the only way his bank would give him a such a loan was if 100% of the risk fell in the first instance personally on his firm's directors.
As a result, he decided not to take the loan up.
"I fail to see how it can be promoted as a scheme backed by the government when in fact it's backed by the company's own directors," he said.
The Federation of Small Businesses, which lobbied for the scheme to be set up, said at first many bank managers did not seem to know about it.
Stephen Alambritis, the FSB's spokesman, said the banks are now catching on but they are still putting up too many obstructions to those applying.
"The obstacles they're putting in the way are to say it needs to be looked at by more senior managers and they need more security," he told the programme.
The banks however say the scheme is proving successful.
Steve Cooper, managing director of Local Business Banking for Barclays, said his bank's managers have all been trained about the scheme and are lending to viable companies.
"We're currently processing between 30 and 40 applications a day and we're approving about £1m a day at the moment," he told the programme.
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