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How the Enterprise Finance Guarantee scheme can provide a boost for businesses

A simple guide to the government’s Enterprise Finance Guarantee scheme by Richard Gregson, Senior Manager, Core Lending at Santander.

Q: What is the EFG?

A:  It’s a government scheme run by the British Business Bank (BBB), part of the Department for Business, Innovation and Skills (BIS). The aim of the scheme is to assist businesses with finance if they have robust business plans but lack suitable security, covering the gap between the business’ potential and the bank’s ability to lend.
 
This can make a critical difference to businesses that are struggling to reach their next stage of growth.
 

Q: How does it work?

A: The customer receives the loan from the bank while the government underwrites 75% of the facility provided. This sum can range from £1,000 to £1.2 million and span anything from three months to 10 years. The money can be received in one go or in instalments. The business then pays the BBB a small quarterly fee reflecting the balance of the capital outstanding.
 
The scheme is flexible and can be tailored to meet a number of specific requirements, from refinancing an existing loan to converting an overdraft into a term loan. The scheme has been renewed for the new financial year, so there is still plenty of time to apply.
 
Q: What kind of companies should apply?

A: The following is just a general guideline, but the EFG is open to: 

  • Viable businesses that operate within the UK
  • Have a turnover of less than £41 million
  • Operate within one of the several sectors eligible for the scheme (click here for a full list).

 
You’ll need a detailed business plan that proves you can service the loan and make it clear how taking on debt could benefit your business.
 
The scheme only applies to businesses that are willing but can’t provide enough security to meet the amount they want to borrow. As a participating bank, we take security where it is present and the EFG backs up the rest. Applications are subject to status and the right to decline any application is reserved.
 
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON THE LOAN.
 
 

Q: What kind of loans are available under the scheme?

A: The scheme is open to term loans, overdrafts and invoice finance. However, typically most customers to date have been supported with a term loan, which is ideal if you’re looking to boost your working capital and invest in developing a new product or service.
 

Q: How can businesses apply?

A: We’d encourage any company seeking to grow to get in touch with Santander, as we have been granted £30 million of government-guaranteed funds to support our customers.

We’ll take you through the process step-by-step and check the loan application meets our criteria.
 
If you’re looking to grow your business, but are struggling to source the right funding, we’re ready to find out more about you and your business needs.
 
To find out more about the Enterprise Finance Guarantee scheme and how we can help, you can read our factsheet or contact your local Santander Relationship Director.

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