UK: micro-finance reaches the people other funds don’t reach

Business start-ups are missing out on vital funds to kick-start their ventures according to the UK National Federation of Enterprise Agencies (NFEA). A recent review of local Enterprise Agency Loan Funds indicates that few people realise they can access micro-finance as well as advice and support from the agency network.

According to the report commissioned by the NFEA, new business owners still rely on funds from family and friends, and an estimated 10% of start-ups struggle to get the level of finance they really need. Non-commercial lending of the type available through the enterprise agencies is intended to reach the seriously financially excluded, those with a viable business proposition but who are unable to borrow from commercial sources. Crucially, the funds come with business advice which significantly increases the chances of unlocking backing from the banks.

Report author David Irwin surveyed micro-finance funds managed by over 40 enterprise agencies across the UK, analysing data from applications, conversion rates and leverage to management cost and sustainability. ?The difference advice can make to the success of an application is quite stark,? says Irwin whose own experience in managing loan funds stretches back to the early 1990s. ?Younger entrepreneurs in particular need help in packaging a mix of finance because they often lack a credit rating with the banks and have few savings. Loans offered by the enterprise agency can have a substantial leverage effect ? reassurance for commercial lenders that other professionals will share the risk and provide additional support.?

www.nfea.com