Government releases new scheme to help SME’s

by | Mar 7, 2009 | Coconut in the Media

This is the latest article published by Nick Strong at Select Your Franchise, friends of Coconut Creatives.

Enterprise Finance Guarantee or EFG has been released by the government to help the banks to fund small and medium size businesses. This is good news for everyone thinking about buying and building their own franchise business in the UK. EFG replaces the Small Firms Loan Guarantee scheme.

The Small Firms Loan Guarantee scheme capped lending to £250,000 and was very much focused on the small business. The government has identified that small and medium size business is in urgent need off access to capital at this time and has extended provision to medium size business as well as small.

Under the EFG scheme the government will guarantee 75% of any loans made, with the bank covering the remaining 25%. The guarantees will mean that the government, or taxpayers, will pick up three-quarters of the the tab for any bad loans.
In total, the Enterprise Finance Guarantee Scheme will see the Government provide £1 billion of guarantees to support £1.3 billion of bank lending.

At a recent British Franchise Association (BFA) forum of franchisors and franchise suppliers Launa Smith of HSBC franchise department shared the following information about the government’s new Enterprise Finance Guarantee scheme.
The Enterprise Finance Guarantee scheme could be the right solution for you if you are a business customer:
looking to increase your working capital
looking to start up, expand or diversify your business
Key features and benefits of the Enterprise Finance Guarantee scheme are that it is:
a government guarantee which secures bank loans to any viable business with a sound borrowing proposal
available for sums of £10,000 to £1,000,000 – a £10,000 minimum is available to limited companies and a £25,000 minimum is available to sole traders and partnerships excluding LLPs.

The loan can be repaid over any period between three months and ten years, individually negotiated interest rates choice of fixed and varied interest rates a quarterly premium is payable to the Department for Business, Enterprise and Regulatory Reform (BERR).  The guarantee covers 75% of each qualifying loan. But for whom is the Enterprise Finance Guarantee (EFG) scheme available?

The EFG is available for you if your business has an annual turnover of less than £25,000,000. Your business must trade and be based in the UK. Your main business activity must be in a sector approved by the BERR and the purpose of the loan must meet the BERR’s eligibility criteria, for example:
starting trading – new start up funding carries a 1.5% premium
developing a project
expanding an existing business
purchase of equipment
business will not exceed the European Community State Aid maximum, as a result of taking out an Enterprise Finance Guarantee scheme.

The key objective of the EFG is to help provide liquidity and business development capital to existing viable companies. A comprehensive business plan is required when applying for an EFG loan via the banks.

If a company already has a Small Loan Guarantee they can still quality for a EFG loan.
All loans are subject to status. Terms and conditions apply.
For more information have a look at and
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