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The Enterprise Finance Guarantee (EFG) scheme

CFS has signed up to be a participating member of the Enterprise Finance Guarantee (EFG) scheme.

The Enterprise Finance Guarantee is a government backed scheme which aims to help smaller, credit-worthy companies where a sound proposition might otherwise be declined because of a lack of available security to support their request. The scheme guarantees to secure bank loans, covering up to 75% of each qualifying loan. Additional security such as personal guarantees may still be sought to supplement an EFG and, ahead of considering an EFG facility we will explore with you whether alternative sources of security are available.

The Government will provide £1bn of guarantees to support up to £1.3bn of bank lending to smaller firms with an annual turnover of up to £25m, which are looking for loans of up to £1m for a period of up to 10 years. An annual fee of 2% is payable to BERR (discounted to 1.5% for 2009), in addition to any standard arrangement fees associated with the facility being requested.

The guarantee, available through many high street banks including the Co-operative Bank, will apply to loans and may in certain circumstances be used to convert existing overdrafts into loans to enable businesses to free up their current overdraft facilities to meet working capital demands.

The scope for eligibility is as follows:

Loan value  £1,000 to £1million
Max business turnover    £25million
Repayment period             3 months to 10 years
Level of government guarantee  75%

Please note that there is no automatic entitlement to receive a guaranteed loan even if you feel you satisfy the basic eligibility criteria.

The EFG scheme is intended to assist companies which would otherwise fail to obtain the finance they need, due to a lack of available security. As such, any customer applying for finance will be taken through our normal application process. As part of the scheme, we are required to demonstrate the following:

  • At the time of agreeing the loan, the borrower is a viable business; capable of servicing the facility being provided.
  • We would not have made the loan without the availability of the guarantee.

For further information please refer to the Department for Business Enterprise & Regulatory Reform website.