Enterprise Finance Guarantee Scheme shows signs of making a difference

Despite negative stories in the national media, Southampton independent accountancy practice HWB has assisted in obtaining new loans under the government's Enterprise Finance Guarantee Scheme (EFGS) - an indication, says director Richard Hurst, that this particular new measure to stimulate bank lending is beginning to show signs of making a difference to companies in the south.

As a result, Romsey-based Merryhill Envirotec is starting the new financial year on a positive note with a £300K loan secured from The Royal Bank of Scotland to facilitate the company's plans for growth.

Critics of the flagship scheme cite a complicated application process but according to Hurst, Merryhill's success proves that money is now being advanced to companies with strong business models.

"Scrutiny of a company's accounts and forecasts is part and parcel of any funding application and it goes without saying that both the bank and the Department for Business, Enterprise and Regulatory Reform (BERR) need to be 100% satisfied that any business they are asked to support is well managed and can prove its viability.

"When it comes to making an application under the new scheme, there's no doubt that producing regular management accounts assists greatly, not least because they form the basis of the projections that are required by the bank."

In Merryhill's case, the future looks bright. As one of the UK's foremost specialists in asbestos and hazardous material removal, Merryhill Envirotec director of business development, Paul Fox, cites the company as a classic example of a good, strong business which required funding in order to realise its growth potential.

"Although Merryhill operates several levels down the procurement chain, the downturn in the housing market and increase in the number of other construction projects being put on hold started to take its toll from a cash flow perspective and company needed to ascertain the best way of restructuring its finances and raising new capital to secure the broad, solid line of financing so crucial to its continued success," he explains.

"Working with HWB and RBS resulted in a strategic decision to make use of the EFGS initiative as soon as it was announced and Merryhill is now in a position to keep developing its business, focus on the future and concentrate on securing a further year of growth."

Meanwhile, HWB reports strong interest in the scheme from existing clients and new enquirers and is progressing a number of further applications on behalf of companies with a broad spectrum of business interests.