Finding the money
The Government recently launched a support package to address the cash flow, credit and capital needs of smaller UK businesses.
We explain the key features.
nder the Enterprise Finance outstanding balance of the loan, assessed and and details of other investment in, and
Guarantee (EFG) scheme, the collected quarterly in advance throughout financial commitments, of the business
Government will provide banks with the life of the loan. A discount of 25% will be
a 75% guarantee to support their lending to applied to all premiums due and successfully
Historic trading figures
viable businesses. This is intended to ensure collected during 2009.
that small firms can get working capital
Statutory and management accounts
and investment finance where a sound
Information on any other publicly funded
proposition may otherwise be declined due
The EFG is available now through seven high
support received by your business within
to a lack of security.
street banks: Barclays, Clydesdale/Yorkshire
the past three years.
The Small Firms Loan Guarantee (SFLG)
Bank, HBOS, HSBC, Lloyds TSB, RBS/
scheme has been suspended, but the type
NatWest and Northern Bank. Smaller SFLG
Working Capital Scheme
of lending it previously underpinned – to
lenders will probably also become lenders
This scheme is not available to individual
businesses that lack collateral and/or track
under the EFG.
businesses, but is designed to allow banks
record – will still be available under the new
to lend to the level that the Government has
scheme, which offers greater help.
requested and that businesses need.
The scheme is available to UK businesses with
The Government will make available to
The EFG will cover:
a turnover of up to £25m that are currently
banks guarantees of up to £10bn for up to 50%
New loans of between three months and not easily able to access the finance they need.
of the working capital on a £20bn portfolio of
10-year maturity. It will enable them to secure loans of between
Existing lending where lenders might not
£1,000 and £1m, and is available up to 31
The banks have made a commitment to
otherwise refinance the debt.
deploy this capital to ensure that existing
Conversion of part or all of an existing
Loans for most business purposes to
lending is available at arrangement renewal
utilised overdraft into a term loan in order
businesses in most sectors are eligible. Your
dates, and to facilitate increased lending for
to release capacity in the overdraft to meet
lender will advise if any restrictions apply to
short-term cash flow purposes. The Scheme
working capital requirements. This is
your business when they consider your loan
should benefit businesses with turnovers of
conditional on the lender being prepared
application. Participating lenders are fully
less than £500m.
to continue to provide an overdraft and
responsible for the decision on whether or not
the viability of both the term loan and the
to use the EFG for a loan. There is no automatic
Capital for Enterprise Fund
entitlement to receive a guaranteed loan and
Further to the £50m ‘debt for equity’ fund
there is no pre-qualification process.
announced in the Chancellor’s Pre-Budget
The Guarantee will fund:
For an initial assessment of your eligibility,
Report, the Government has announced
use the tool on Business Link’s website at
that this Fund will provide £75m of equity,
. You can print off
made up of £50m of Government funds and
Investment by businesses seeking to grow
the results and take them to your bank.
an additional £25m from Barclays, HSBC,
Lloyds TSB and RBS/NatWest.
The purpose of the Fund is to provide
equity and quasi-equity of £250,000 to £2m
You will need to provide all the information
In addition to regular capital and
for companies under the EU SME definition
normally required by a lender in connection
interest payments to your lender, plus
– that is, with turnovers of up to €50m – that
with a loan application, which will generally
any arrangement fee, a premium will be
have viable business models and growth
payable to the Department for Business,
potential, and are in need of long-term capital.
Enterprise and Regulatory Reform (BERR).
A current business plan, including details of
To register interest, call 0845 459 9780.
This is equivalent to 2% per annum on the the purpose for which the loan is required
our local Regional Development The FPB can also advise members on
Agency (RDA) may be able to help alternatives to conventional bank overdrafts
you to access finance. If you are based and commercial loans. Invoice finance
in England, there is a £25m initiative called – where you can draw down cash from your
the Regional Loan Transition Fund that can lender as soon as you make a sale – can greatly
help businesses at a regional level. But move improve the cash flow of your business.
fast – it is only available until the end of For more information, call our helpline on
June 2009. 0845 130 1722.
Other government grants and funds The FPB also works with the National
may be available to your business. To check Association of Commercial Finance Brokers
what help you are eligible for, use Business (NACFB), whose members can help you to
Link’s Grants and Support Directory: negotiate the best deal for your business.
. Find a broker at www.nacfb.org
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