Loans and overdrafts

Enterprise Finance Guarantee

If you are a small to medium-sized enterprise, you may have viable business plans that need funding and for which a loan would be appropriate. However, you may be struggling to access the finance or working capital required due to economic conditions and because you have no - or not enough - security to secure a commercial loan.

The Enterprise Finance Guarantee helps to overcome this by providing lenders with a government guarantee for 75 per cent of lenders' exposure on individual loans. The Guarantee is available to businesses throughout the UK through approved lenders.

The Enterprise Finance Guarantee supports lending to viable businesses with an annual turnover of up to £25 million seeking loans of £1,000 through to £1 million and is available to businesses in most business sectors.

Participating lenders administer the eligibility criteria and make all their own commercial decisions regarding borrowing. The decision whether or not to use the Enterprise Finance Guarantee with any loan rests with the lender and follows their commercial assessment of the proposition. As with all lending you must be able to demonstrate to the lender that you can repay the loan. Find out about the Enterprise Finance Guarantee, including the types of lending available, on the Department for Business, Innovation & Skills (BIS) website - Opens in a new window.

From 1 August 2010, lenders taking part in the Enterprise Finance Guarantee scheme will have 20 days from receipt of your application to reach a lending decision.

The main features and criteria of the scheme are as follows:

• There is a guarantee to the lender covering 75 per cent of the loan amount. The borrower pays a premium of 2 per cent per annum on the outstanding balance of the loan, payable to BIS.
• It enables bank facilities of between £1,000 to £1 million and with terms of up to ten years.
• It is available to qualifying UK businesses with an annual turnover of up to £25 million.
• It is available to businesses in most sectors and for most business purposes, although there are some restrictions.
• The lender is entitled to seek unsupported personal guarantees but is not permitted to take a direct charge over a principal private residence for a new Enterprise Finance Guarantee loan.

The Enterprise Finance Guarantee is available until 31 March 2011.

Use our interactive tool to assess your eligibility for government guaranteed lending schemes.

Subjects covered in this guide

• Introduction
• Loans
• Where to look for a loan
• Obtaining a loan and offering security
• Overdrafts
• Loans from friends and family
• Providing a guarantee for your loan
• Enterprise Finance Guarantee
• European Investment Bank funding for small and medium-sized businesses
• Here's how my business benefited from taking out a loan (Flash video)
• Here's how securing the right loan helped my business develop

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