Enterprise Finance Guarantee
The Enterprise Finance Guarantee (EFG) is a loan guarantee scheme aimed at facilitating additional bank lending to viable SMEs with no or insufficient security to secure a normal commercial loan. It was launched in January 2009 to help viable SMEs obtain the working capital and investment that they need during a time of unprecedented tightened credit conditions. EFG is a targeted measure and is not designed for the majority of viable businesses to whom banks should lend; nor is it intended for businesses who are not viable and that banks are rejecting on that basis.

EFG is available until 31 March 2011.


EFG Eligibility Criteria
EFG supports lending to viable businesses with an annual turnover of up to £25m seeking loans of £1,000 through to £1million and is available to businesses in most business sectors.

However, EFG is subject to certain sector restrictions arising from the EU De Minimis State Aid rules, the Industrial Development Act 1982 (which provides the statutory basis for EFG) and also for national policy reasons. A list of main sector restrictions is in the EFG Business Sectors.

EFG is aimed at businesses which do not have sufficient security, at the margins of commercial lending decisions, and at businesses that can ultimately repay the loan in full.



Types of EFG Facilities Available
Under EFG, the following facilities can be guaranteed, repayable over a period of between three months and ten years until otherwise indicated:

New term loans
Refinancing the existing term loans, where the loan is at risk due to deteriorating value of security or where for cash flow reasons the borrower is struggling to meet existing loan repayments
Conversion of an existing overdraft into a term loan to meet working capital requirements
A guarantee on invoice finance facilities to support an agreed additional advance on an SME's debtor book. This will supplement the invoice finance facility already in place. (Available for terms up to three years)
A guarantee on new or increased overdraft borrowing for the SMEs experiencing short term cash-flow difficulties. (Available for terms up to two years)
An EFG lender may not necessarily offer the full range of lending provided for under the EFG rules if to do so would be incompatible with their normal commercial lending practices

There are currently 44 lenders in the scheme.