Member Article

Bolton business broker urges business secretary to reinstate essential finance option to keep British entrepreneurial spirit alive

Gareth Smyth, CEO of Bolton-based business brokers Hilton Smythe Group, has written to business secretary Alok Sharma MP, urging him to reinstate Enterprise Finance Guarantees (EFGs) to boost entrepreneurial spirit post-COVID.

Before the lockdown, EFGs provided finance options for prospective entrepreneurs looking to buy a business but who did not have adequate security to support a loan from the banks. These EFGs were scrapped during lockdown in favour of bounce back loans and the Coronavirus Business Interruption Loan Scheme (CBILS), which are not in themselves designed to be utilised to purchase a business for the first time.

This means that if the individual doesn’t have the assets in place to secure funding against to buy their new venture out right, they can run into problems when seeking funding, ending their entrepreneurial journey before it has begun.

Research conducted by Hilton Smythe Finance estimates that 20 per cent of buyers of small businesses utilised the EFG scheme in order to purchase the business in question. This means a proportion of potential entrepreneurs could find themselves without adequate funding to buy their new business, despite having the experience and skills to make it a success.

In his letter, Gareth Smyth has called on the business secretary to restore the EFG funding, rather than replace it, to help those who may have lost their jobs due to COVID get back to work, possibly following a dream career path working for themselves.

Gareth Smyth said: “The coronavirus and the subsequent lockdown it caused has impacted businesses and employees across the UK significantly. It has led to the number of people claiming unemployment benefits to rise to 2.6 million and has resulted in the closure of several large and small high street brands.

“Some people have chosen to turn the crisis into an opportunity by choosing to invest in a long-held passion to run their own business, rather than trying to find a job in a suppressed market. However, some are falling at the first hurdle because they can’t prove to the banks that they’re worth the risk, meaning these chances are only feasible for cash buyers.

“Businesses are still selling and interest in purchasing a business has increased year on year despite the lockdown, however some buyers, who would have been able to purchase pre-COVID utilising the EFG scheme, may now not be able to and this will dampen the great British entrepreneurial spirit. These people are hardworking entrepreneurs who have most of the means necessary to successfully buy and run a business but cannot because they don’t have assets and the banks are too risk averse to lend without security.

“I strongly urge Mr Sharma to consider reinstating the EFGs, or at least introducing a finance option that would support entrepreneurs, giving more individuals the opportunity to come out of COVID with a career.”

This was posted in Bdaily's Members' News section by News Gathering .