Banks still reluctant to lend to small firms according to Department for Business, Innovation and Skills

Bank lending to small and medium sized firms has fallen by 20 per cent over the last quarter under the government's Enterprise Finance Guarantee Scheme (EFG). The system offers banks a 75 per cent state guarantee to encourage them to lend money to ailing or growing businesses. However, figures from the Department for Business, Innovation and Skills show that lending dropped from £186 million in the first quarter of this year to £149 million in the second.