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 have 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, the Government will guarantee lending to viable businesses to ensure that they can get the working capital and investment that they need.
This £1.3bn 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 and is available up to 31 March 2010.
The guarantee can be used to support new loans, to refinance existing loans where the loan is at risk due to deteriorating quality of security, or to convert an existing overdraft into a loan to release capacity to meet working capital requirements.
The Enterprise Finance Guarantee is available now through 26 lenders.
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.
For an initial appraisal on whether your business may be eligible for the Enterprise Finance Guarantee go to the Real Help Help with Finance web page hosted on Business Link where you can also complete an assessment which you can then take to your bank.
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 under the new scheme. Government will be bringing forward proposals for a scheme post March 2010 later this year.
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 EFG 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.