Several banks in Britain have registered significant increases of lending to small- and medium-sized enterprises (SMEs) under a governments business finance scheme, said the Department for Business, Innovation and Skills (BIS) on Monday.

The Bank of Scotland, Lloyds and Santander have all reported big increases in the use of the Enterprise Finance Guarantee (EFG) scheme to support businesses seeking credit, with the lending for 2012/13 increasing to 91.7 million pounds (142.1 million U.S. dollars) in the last quarter of 2012, the highest level since September 2011, said the BIS in a statement on the British government website.

It said that the upturn of lending to SMEs came after the government had written to the banks and publicly named those failing to make full use of the scheme to get finance out to firms.

"This is an important step towards increasing the finance small firms can access. Some banks are working harder, and they should be recognized for that," said Business Minister Michael Fallon.

He urged banks to continue to improve their use of EFG scheme, saying that access to finance is a crucial issue to SMEs and economic growth.

"This increase needs to be maintained to improve business confidence and demonstrate that responsible lending can still take place," he noted.

The EFG, which started in January 2009, is a major government scheme which aims to increase access to finance for viable SMEs.

To date, it has resulted in 2.14 billion pounds being lent to over 20,000 SMEs.

The EFG lending complements commercial bank lending rather than competing against it, but ensures those SMEs at the margin that would be turned down for a bank loan due to lack of security or sufficient track record are able to secure finance.

The scheme promotes lending by providing a 75-percent government guarantee on a banks' lending, allowing them to provide loans to SMEs that would otherwise have been turned down.

A recent independent study found that the EFG scheme has delivered a net 1.1-billion-pound benefit to the economy, and is worthwhile as every 1 pound invested by government delivers 33.50 pounds to the economy. (1 pound = 1.55 U.S. dollars) Endi

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