Grants and Support Directory
Enterprise Finance Guarantee
Description
The Enterprise Finance Guarantee is a guarantee facility for small businesses intended primarily to improve the availability of working capital through term loans and the consolidation of overdrafts. It will also support lending for business growth and development in cases where a sound proposition may otherwise be declined due to a lack of security.
In the Pre-Budget Report of 9 December 2009, the Chancellor announced an extension of Enterprise Finance Guarantee until 31 March 2011.
The guarantee will cover the following types of lending:
- new term loans (with terms of between three and ten years)
- refinancing the existing term loans, where the loan is at risk due to deteriorating value of security or where for cashflow reasons the borrower is struggling to meet existing loan repayments
- conversion of an existing overdraft into a term loan to meet working capital requirements
- guarantee on invoice finance facilities to support an agreed additional advance on a SME's debtor book. This will supplement the invoice finance facility already in place
- guarantee on new or increased overdraft borrowing for the SMEs experiencing short term cashflow difficulties
The guarantee will fund:
- working capital
- investment by businesses seeking to grow or develop
In addition to regular capital and interest payments to your lender, and any arrangement fee which they may charge, a premium is payable to the Department for Business, Innovation and Skills (BIS).
The premium is equivalent to two per cent per annum on the outstanding balance of the loan, assessed and collected quarterly in advance throughout the life of the loan.
A discount of 25 per cent will be applied to all premiums due and successfully collected during 2009.
Delivery of the Enterprise Finance Guarantee, including the decision on whether or not it is appropriate to use it in connection with any specific lending transaction, is fully delegated to the participating lenders. There is no automatic entitlement to receive a guaranteed loan and nor is there any pre-qualification process for it.
The following main lenders will lend to eligible businesses under Enterprise Finance Guarantee:
- Airdrie Savings Bank
- Alliance and Leicester Commercial Bank
- Bank of Baroda
- Bank of Cyprus UK
- Bank of Ireland (Northern Ireland)
- Bank of Scotland
- Barclays
- Big Issue Invest
- Bolton Business Ventures
- Braveheart Investment Group
- Business Enterprise Fund
- Business Finance Solutions
- Capitalise Business Support
- Clydesdale Bank
- Close Brothers
- The Co-operative Bank
- Cumbria Asset Reinvestment Trust
- Donbac Finance
- DSL Business Finance
- First Trust Bank (Northern Ireland only)
- Foundation East
- GLE oneLondon
- HSBC
- Lloyds TSB
- NatWest
- NEL Fund Managers
- Northern Bank (Northern Ireland)
- The Royal Bank of Scotland
- State Securities
- South West Investment Group
- Triodos Bank
- UK Steel Enterprises
- Ulster Bank (Northern Ireland)
- Whiteaway Laidlaw Bank
- Venture Finance
- Yorkshire Bank
The government guarantee is a guarantee to the lender.
Value
Up to £1.3 billion of new bank lending is being guaranteed by the Government since launch in January 2009 up until 31 March 2010. Up to £500 million of new bank lending will be guaranteed between 1 April 2010 and 31 March 2011.
Eligible businesses are able to borrow between £1,000 and £1,000,000 when this would not otherwise have been possible.
Eligibility
Small businesses in the UK with an annual turnover of up to £25 million are eligible.
Loans for most businesses purposes to businesses in most sectors are eligible. A list of sector restrictions is available on the BIS website. Your lender will advise if any of these restrictions affect your business when they consider your loan application.
Any application will first be assessed via the lender's own commercial criteria before any consideration of the EFG eligibility criteria.
Evaluation
Businesses will need to provide all the information normally required by a lender in connection with a loan application, which will generally involve completing their application form and providing supporting information, typically including your:
- current business plan, including details of the purpose for which the loan is required and details of other investment in and financial commitments of the business
- financial projections
- historic trading figures
- statutory and management accounts
- information on any other publicly funded support received by your business within the past three years
Additional Info
Enterprise Finance Guarantee has replaced the Small Firms Loan Guarantee scheme (note that eligibility for the EFG is expanded from the previous scheme).
| Website: | www.berr.gov.uk/whatwedo/enter prise/finance/efg/page37607.ht ml - Opens in a new window |
| Contact: | Department for Business, Innovation and Skills |
| Address: | 1 Victoria Street London England SW1H 0ET |
| Tel: | 020 7215 5000 |
Please note: The Grants and Support Directory shows a selection of programmes that are available and match the criteria you select. This does not necessarily mean that you will be eligible for the programmes identified.
