Enterprise Finance Guarantee Scheme (EFG)

It has been announced by the Government that until March 2010 there is going to be a new initiative, the Enterprise Finance Guarantee Scheme (EFG), which will help companies with a turn over of up to £25 million. Loans of up to £1 million are possible, with 75% guaranteed by the Government and 25% at the banks’ risk. This will of course be based on the applicants meeting certain criteria and for companies that are creditworthy.   There are some big upgrades to this scheme compared to the Small Firms Loan Guarantee Scheme with more companies eligible and the loans potentially bigger. In addition, the SFLG could not be used to cover debt, and many of our clients seek a way of consolidating debt lines and this was impossible to do with the old scheme.

What is Enterprise Finance Guarantee Scheme?

This is the Government's new EFG scheme: £1bn will join with up to £1.3bn of new lending by banks to eligible SME’s.

Which companies will benefit?

The EFG Scheme is for companies with an annual turnover of a maximum of £25m, seeking loans of £1,000 to £1m, which can be repaid over a period of up to 10 years.

Most companies in most sectors will be eligible for the scheme, except state aid rules exclude businesses in the agriculture, coal and steel sectors.

What kinds of lending will this cover?

The EFG scheme can be used to support refinance existing loans, new loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs.

How much of the loan is the Government going to guarantee?

The Government will guarantee 75 per cent of the loan, the remaining 25% is at the banks’ risk.

How long will the scheme run for?

EFG will be available available until March 2010.

Who are the participating lenders?

• HSBC Barclays
• Clydesdale / Yorkshire Bank
• HBOS
• Lloyds TSB
• RBS / Natwest
• Northern Bank

Other lenders will be come eligible as they apply.

Strategy Corporate Finance has many years experience of helping clients obtain Government Loan Guarantee Schemes, with a success rate of over 90%.

We can only help with funding and advice for sums over £50,000. For enquiries below £50,000, please contact your nearest Business Link.

More information? Ask us here.