Enterprise Finance Guarantee (EFG) Loan Scheme takes over from the Small Firms Loan Guarantee Scheme (SFLG) Overview 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 a success to a failure; but because the current economic conditions has made a significant impact on the availability of capital as the banks change their approach to risk and tighten lending conditions. Under the Enterprise Finance Guarantee (EFG) Scheme, the Government will guarantee lending to viable businesses to ensure that they can get the working capital and investment that they need. This scheme will support bank lending, of 3 months to 10 year maturity, to UK businesses with a turnover of up to £25 million who are currently not easily able to access the finance they need. It will enable them to secure loans of between £1,000 and £1 million through the Government guarantee. COALITION GOVERNMENT UPDATE Since the Coalition Government has taken office it has announced: A £200 million increase to the current £500m Enterprise Finance Guarantee (EFG) facility for 2010/11. In total the EFG will now support up to £700m in bank lending to viable small businesses in the year to March 2011. As part of ensuring that viable SMEs with no financial track record or insufficient security can access debt finance, the Government will continue the Enterprise Finance Guarantee until 2014-15, providing up to £600m of additional lending to around 6,000 SMEs next year alone and, subject to demand, over £2bn in total over the next 4 years. As speed and certainty is important for EFG lending decisions, a processing target of 20 working days will be introduced for all major lenders (who account for over 97% of the Small and Medium Sized Enterprise (SME) lending market) participating in the EFG to provide certainty for businesses on how long their applications will take to process. Measurement of the 20 day period begins when the lender has received all necessary information from the SME for the credit application to be prepared and ends when the lender has either made an offer, or written a letter declining the application, to the SME. The lender must ensure that the SME is aware of what information is necessary for an application to be properly considered. If, additional due-diligence is required before a credit application is prepared then the 20 day period will only begin once that examination has been completed. Any complaints from SMEs on EFG processing times will be examined in conjunction with the lender concerned. Changes to the terms of the guarantee to enable smaller and specialist lender to participate fully, to take effect from April 2011. What has happened to SFLG The Small Firms Loan Guarantee is suspended. The type of lending previously provided under SFLG ( to businesses that lack collateral and/or track record ) will still be available to viable businesses under the EFG scheme. . How is EFG different to SFLG? In short it offers more help to more businesses – EFG provides loans up to £1 million compared to an upper limit of £250,000 for SFLG and supports businesses with a turnover of up to £25 million compared to £5.6 million under SFLG. Additionally ECF loans can be used to convert an overdraft into a loan. EFG is available to viable businesses that in normal circumstances would be able to secure lending from banks but who cannot secure bank lending in the current times. In the same way as the SFLG, the Government are underwriting 75% of the bank's liabilty in order to mitigate the bank's risk, to a lage extent, and therefore make lending easier. . Application for Enterprise Finance Guarantee loans We are specialists in preparing businesses for and helping with applications to lenders in our network who actively seek involvement in the scheme. Click on "Contact" below or call us on 01784 439790 for a free assessments of your ability to qualify for a loan of up to £1,000,000 under this scheme. Even if you do not qualify for some reason, we may be able to suggest other routes to funding your business. That is what we are here for.

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