It has been announced that as of the 14th of January 2009 until March 2010 there is going to be an new initiative called the Enterprise Finance Guarantee (EFG) Scheme which will assist businesses with a turn over of up to £25 million with a loan of up to £1 million, 75% will be guaranteed by the Government and 25% will be unsecured and at the banks’ risk. This will of course be based on the applicants meeting certain criteria and for companies that are creditworthy.
There are some very interesting changes to this scheme compared to the Small Firms Loan Guarantee Scheme as the SFLG could not be used to cover debt; many of our clients seek a way of consolidating various debt lines that they have and this was impossible to do with the old scheme. At first sight the sector industries that are ineligible seem to be greatly scaled down, we will of course have to wait to get final information.
What is EFG Scheme?
This is the Government's new £1bn Enterprise Finance Guarantee (EFG) Scheme will support up to £1.3bn of new lending by banks to eligible SME’s with working capital or investment needs.
Which companies will benefit from the scheme?
The EFG Scheme is going to be open to businesses with an annual turnover of up to £25m, seeking loans of £1,000 to £1m, which can be repaid over a period of 10 years.
Most businesses in most sectors will be eligible for the scheme. However, state aid rules exclude businesses in the agriculture, coal and steel sectors
What sorts of lending will this cover?
The guarantee can be used to support refinance existing loans, new loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs.
How much of the loan is the Government going to guarantee?
The Government will guarantee 75 per cent of the loan.
How long will the scheme run for?
EFG will be available from Wednesday 14 January 2009 and will be available until March 2010.
Who are the participating lenders?
Barclays
Clydesdale/Yorkshire Bank
HBOS
HSBC
Lloyds TSB
RBS/Natwest
Northern Bank
http://www.ukba.co.uk
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