British banks should attempt to regenerate a scheme introduced at the height of the global economic slump in order to improve lending to small businesses, a government official believes.
Business secretary Michael Fallon has called on UK lenders to boost their involvement in the Enterprise Finance Guarantee (EFG) - which was launched in 2009 - sooner rather than later, the Daily Telegraph reports.
This initiative sees the administration act as a guarantor on 75 per cent of all bank loans to smaller organisations worth between £1,000 ($1,500) and £1 million in order to provide these companies with more security in their lending arrangements.
However, financiers have been increasingly reluctant to get involved in the EFG recently, which has led Mr Fallon to pledge he will "hold banks to account" until loans through the programme improve.
"EFG loans are delivered through the banks, and I want to see them making more use of the scheme. Clearly the demand is there for this type of financial support, so we must start to see an increase in take-up," he noted.
By Claire Archer