Enterprise Finance Guarantee

Launched by the Government on 14 January 2009, the Enterprise Finance Guarantee (EFG) scheme supports us in lending to customers where traditional bank lending would not have been available. It provides the Bank with a partial guarantee (75%) from the Government on borrowing, and means we are now able to offer qualifying businesses loans of up to £1 million.

Loans supported by the EFG scheme can be used for a wide variety of purposes, including working capital and other business expenditure, and are available to most businesses.

So, what is EFG all about?

Q. What is it?
A. The EFG Scheme will support up to £1.3 billion of new lending by banks to viable SMEs with working capital or investment needs.

Q. Who will benefit from the scheme?
A. The EFG Scheme is open to businesses with an annual turnover of up to £25 million, seeking loans of £1,000 to £1 million, repayable over a period of between 3 months and 10 years. Most businesses in most sectors will be eligible for the scheme. However, some sectors are excluded and there are restrictions in some sectors, please speak to your Business Manager for further details.

Q. What types of lending will this cover?
A. The guarantee can be used to support new loans, refinance existing loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs. However this funding cannot be used to refinance existing loans solely for the purpose of releasing equity.

Q. How much of the loan will Government guarantee?
A. Government will guarantee 75 per cent of the loan.

Q. How long will the scheme run for?
A. EFG will be available from Wednesday 14 January 2009 and will operate until March 2010.

Q. Are there any additional fees associated with the EFG?
A. If you qualify for the BIS guarantee and take a loan under the EFG scheme, in addition to your regular loan repayments and any arrangement fee paid to the Bank you need to pay a premium to BIS. Paid quarterly to aid cashflow, the premium is based on 2% per annum on the reducing loan balance.

If you think your business could benefit from EFG funding, then get in touch with your local Business Manager for further support and guidance.