The Enterprise Finance Guarantee (EFG) is a guarantee scheme to facilitate lending to viable businesses that have been turned down for a loan or other form of debt finance due to inadequate security or a proven track record. In instances such as this, EFG may be able to turn that decline into an acceptance, but that is a decision for the lender and will only be considered if the lender is satisfied that your business is viable and can afford the loan repayments.
The delivery of EFG, including all lending decisions, is fully delegated to the lender. They will decide whether EFG is appropriate and confirm whether your business is eligible, but businesses unsure about whether they meet the lender's criteria for borrowing or have had a borrowing request declined are encouraged to ask their lender about EFG.
While the government provides a guarantee to the lender, they have no role in the decision making process and are not party to the loan agreement between the borrowing business and the lender.
Types of facilities available
Facilities of the following types, repayable over a period of 3 months to 10 years unless otherwise stated, may be facilitated under EFG subject to the participating Lender offering facilities of the types concerned:
New term loans: For working capital or investment purposes, including R&D, in cases where the proposition would otherwise be declined due to the absence or inadequacy of security.
Revolving facilities: New or increased overdrafts, or other forms of revolving facility borrowing, where the SME is viable but has inadequate security to meet a lender's normal requirements for the level of overdraft requested (available for terms of up to 3 years at a time).
Invoice finance facilities: An additional advance on an SME's debtor book, either in terms of the facility limit or advance percentage, to supplement an invoice finance facility on commercial terms already in place (available for terms up to 3 years at a time).
Term loan for debt consolidation or refinancing: Provision of a new term loan to replace an existing loan, revolving facility or invoice finance facility which is at risk due to deteriorating security values or where for cash flow reasons the borrower is struggling to meet the existing repayment structure.
Revolving facility refinance: Preservation of part or all of an existing overdraft, or other revolving facility, which would otherwise be withdrawn due to a failure to satisfy the lender's security requirements.
Invoice finance refinance: Preservation of part or all of an existing invoice finance facility which would otherwise be withdrawn due to a failure to satisfy the lender's security requirements.
Trade credit guarantee: Providing a guarantee on new or increased monthly trade credit account where the SME is viable but has inadequate security to meet a lender's normal requirements for the level of credit requested (currently being piloted through a number of large businesses supplying to SME trade customers and generally available for terms up to 1 year).
Please note that participating lenders will generally only provide EFG facilities of types which are consistent with their normal commercial lending product offerings and are under no obligation to offer the full range of types or values of EFG-backed facilities.
For more information contact:
British Business Bank
3rd floor, Fleetbank House, 2-6 Salisbury Square, London, EC4 8JX