Government Enterprise Finance Guarantee Scheme

In the current climate businesses are finding it increasingly hard to access the finance they need, particularly Working Capital. This is not because the business has suddenly transformed from success to a failure, but because the current economic conditions have made a significant impact on the availability of Capital.

Under the (EFG) Scheme, the Government will guarantee lending to viable businesses to ensure that they can get the Working Capital and Investment they need.

The £1.3bn scheme will support Bank lending, of 3 months to 10 year maturity, to UK businesses with a turnover of up to £25m who are currently not easily able to access the finance they need.It will enable them to secure loans of between £1,000 and £1m through the Government Guarantee.

In short it offers more help to businesses than the previous Small Firms Loan Guarantee Scheme (SFLG).
Additionally EFG loans can be used to convert an Overdraft into a Loan.

Main Features and Criteria

  1. The Scheme was extended in March 2010 and again in March 2014. No date has yet been published for a further review.
  2. The Guarantee can be used to support new loans, refinancing existing loans, or to convert part or all of an existing overdraft into a loan to release capacity to meet Working Capital.
  3. Delivery of the EFG, including the decision on whether or not it is appropriate to use in connection with any specific lending transaction, is fully delegated to the participating Lenders.
  4. There is no automatic entitlement to receive a Guaranteed Loan and nor is there any pre-qualification process for it.
  5. Most businesses in most sectors will be eligible for the scheme. However, State Aid Rules exclude businesses in the agriculture, coal and steel sectors.
  6. A list of ineligible business activities has been published, many similar to the former SFLG Scheme. ( Contact us to find out if your business qualifies).
  7. Government will guarantee 75% of the loan.
  8. For all loans, a guarantee premium of 2% per year on the outstanding balance is payable quarterly to the Government.

What has happened to The Small Firms Loan Guarantee Scheme?

This scheme is suspended. The type of lending previously provided under the SFLG – to businesses that lack collateral and/or track record – will still be available under the EFG Scheme.

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