Stafford MP Jeremy Lefroy has spoken up for small and medium sized businesses during the debate on the budget in the House of Commons.

Addressing the Chamber on Thursday, Mr Lefroy talked about the need for growth and the role that small businesses must play in securing our economic recovery. He said:

“Growth is clearly vital for our economy. The importance of the private sector and of private sector investment taking us out of the situation we are in and creating jobs and tax revenues.”

In a speech addressing the difficulties small business are having accessing the finances needed to grow, he quoted figures from the Institute of Directors (IoD) which show, in 2001, 45% of its members were financing their businesses through bank loans and 40% through overdrafts. Yet this year that has dropped to 28% and 36% respectively, with 20% now in some part reliant on credit cards. He said:

“That is not a sustainable model for SME finance when we are looking to SMEs to be the engine that pulls us into the strong growth necessary both to tackle the scourge of unemployment and to generate the tax revenues that we so desperately need.”

Referring to another study by the IoD, who represent small and medium size businesses, and found that 83% of businesses declined for bank finance were not offered information on the Government's Enterprise Finance Guarantee (EFG). Mr Lefroy spoke of the need for better implementation:

“The EFG will not help small and medium-sized enterprises if the participating banks do not make their customers fully aware of it.

“SMEs also need greater access to riskier capital, particularly equity and quasi-equity, but the UK has not excelled in that area. The new or growing business cannot necessarily provide security for loans, so more unsecured finance is desperately needed. I therefore welcome the growth capital fund that the Government will create as part of the existing £237 million programme of enterprise capital funds.

“There is also the North Staffordshire Risk Capital Fund, which invests in businesses in my constituency. It is a public-private partnership, with investment from local businesses, individuals and the regional development fund. It was set up with a 10-year life and is drawing to a close. We must ensure that it is renewed or replenished, because it performs a vital role. I will do everything I can to assist with that.”

He concluded:

“In my working life in business, over more than 25 years, the greatest pleasure was in creating new and lasting jobs, and the times of most distress were when someone had to be made redundant. Working with local people to create or support such funds gives us the chance to play a direct role in helping SMEs to do the job that they want to do and that we so desperately need them to do.”