Enterprise Finance Guarantee Scheme

Enterprise Finance Guarantee Scheme

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I'm planning to submit a client's application for a loan under the new scheme (the successor to the Small Firms Loan Guarantee Scheme).  Has anybody got any experience of this scheme yet - particularly whether the banks are more enthusiastic than they were about SFLGS - and are there any tips for getting an application through the system quickly?

Many thanks for your feedback!

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By jvenegas16
02nd Oct 2009 09:14

Experience on EFG

The Enterprise Finance Guarantee is not as welcome as you may think from the bank's point of view. It depends on the amount you are looking for, the amount of security from the company and/or the directors, the security the directors or the company can provide, and after all that they will always turn around and they will try to offer you different sort of finance or a combination of them, i.e. invoice finance, a standard loan.

The banks will tell you that the EFG is expensive and it is not guarantee and it is not the way to go forward and the way to finance the company, etc. Nevertheless you still need to provide financial information: company accounts, business plan, projections, purpose of the loan, why you need the loan (normally shown on your cash flow within the business plan).

Another important point is the history of the company. If there have been any issues in the past or the company has not been performing well. They will look at if the company can repay the loan. I am saying all this because they may not even look at the application after you spent time compiling and preparing the business plan.

I would recommend that you speak to the bank or banks you want to submit the application for before preparing all the information. Some banks may want to have a chat first and ask you for specific information, which could less than you may have thought in the first place.


Juan Carlos

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By JamesPrice
02nd Oct 2009 09:53

Steps Required
It's not really a question of you deciding to make the application, the bank will need to do that, but first of all they need to be convinced that there is a viable business plan to support, only then will they look at security. The old SFLG scheme had an incredibly high default rate and the price of the loans under the EFG (don't forget you will be paying an extra 2% to BERR/BIS) reflects that experience.

There are no shortcuts. The most active EFG banks are those you would probably expect given their ownership profile - RBS and Lloyds.

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