If you’ve seen other articles in our mini blog series on Alternative Finance, but not any options that seem right for your business, have you considered …

the Enterprise Finance Guarantee Scheme?

Set up by the UK Government in 2008, this is a Government guaranteed lending scheme (via the British Business Bank which is Government owned, but independently managed). It is aimed at opening up finance options for small businesses businesses with inadequate security and would otherwise be turned down for debt based finance. You, as the borrower, still remain 100% liable for the sum you borrow and the lender shares the risk with the Government therefore extending the level of risk they can accept.

It’s a good option if:

  • You want to borrow between £1000 and £1.2 million for business purposes
  • You wish / are able to pay back between 3 months – 10 years for term lending and 3 months – 3 years for overdrafts and invoice financing
  • Your business turnover is less than £41,000 per year
  • A lender can be satisfied that your business meets their usual commercial requirements for a loan and the only barrier is that you cannot provide adequate security (e.g. property or your business equipment) for the lender to approve the risk

It may not work for you if:

  • You are unable / unwilling to pay the 2% fee on the outstanding balance required to participate in the scheme
  • Your business and loan case does not meet the usual commercial criteria for the lender you are approaching
  • You are looking for finance specific export orders (alternative forms of support are available)

The individual lending decision rests with the lender so their criteria must be met and it is at their discretion what kinds of finance they will offer. Not all lenders offer all the kinds of finance covered by EFG. Having said that, there is nothing to stop borrowers approaching more than one lender, so others may offer the kind of lending you are looking for.

As with any financing scheme, be sure to investigate the details and check the terms and conditions are suitable for your business and your needs. There is an element of risk involved in any business loan and the Government guarantee here extends only to the lender, not to you as borrower!

Here you can find out more about the list of lenders to approach.

Here you can find out more about the scheme in general.

Other posts in our Alternative Finance series: