Key Takeaways
- Getting a loan from a traditional bank as a small business or startup is genuinely difficult and the EFG scheme exists precisely because of that reality.
- The UK government backs the EFG scheme which means lenders have far more confidence approving loans they might otherwise turn down flat.
- Most UK businesses can apply regardless of age as long as the annual turnover does not exceed 41 million pounds and the funding needed falls within the eligible range.
- Certain industries including agriculture, fishing, coal, steel, and medical are excluded from the scheme so checking eligibility before applying saves a lot of wasted effort.
- If the EFG scheme does not work out it is not the end of the road because there are other financial options available for ambitious small businesses.
Want to increase cash flow in your business? Looking for financial support to grow or flourish your small business? Then go through this article to discover an amazing scheme.
Sometimes small businesses and startups find fiendishly difficult to get necessary financial aid for running their business. There are very fat chances of getting loan from banks. However, UK government has cropped up with a silver bullet for the early stage small businesses. The long-standing financial problems faced by these companies will get solved by the Enterprise Finance Guarantee Scheme (EFG).
EFG is intended to fuel the development of small companies and startups which otherwise is sluggish due to lack of funding. If the lender is convinced that your organization is capable of repaying the loan, the slow-moving business will turn powerful with the government-backed scheme.
Eligibility criteria for EFG scheme:
Whether your business is budding or long-established, EFG scheme is open for everyone. But there are some businesses and eligibility concerns related with this scheme.
Which businesses are not eligible for the scheme?
According to the sources, most of the organizations can apply for the scheme, however there are some business lines which are not eligible for the EFG scheme. Industries such as agriculture, medical, education, forestry, shipping, fishing and coal and steel cannot avail financial assistance from EFG scheme.
Scheme is available for:
EFG scheme is open to for businesses that:
- Any age business can apply for loan
- Function/operate in UK
- Companies whose annual turnover is not more than 41 million pounds. In March 2012, the ceiling has increased to annual turnover of 25 million pounds
- Businesses who are looking for fund from 1,000 pounds to 1.2 million pound
- Companies which are liable to repay the loan within 3 months to 10 years
How to apply for the loan under EFG scheme?
For getting benefited with EFG scheme, the applicant will have to fill an application which will be similar to any loan application. Along with the application the business which applies for loan has to submit essential documents like business plan, financial estimation and management accounts.
Lenders who offer EFG Scheme:
From major high street banks to smaller professional institutions, there are around 40 lenders who are ready to lend support to businesses under EFG scheme. HSBC, Lloyds TSB, Skipton Business Finance, State Securities, Barclays, Business Finance Solutions are some of the reputed lenders.
Skipton Business Finance:
UK government has selected Skipton Business Finance as one of the reputed lenders of Enterprise Finance Guarantee. Skipton offers flexible invoice finance solutions to UK businesses which include invoice factoring and invoice discounting.
Skipton Business Finance Company provides financial assistance to businesses with revenue of up to 25 million pounds. 75% of the loan offered is guaranteed by the UK government.
Getting support through EFG scheme can make a big difference to the growing companies. However if you fail to get the loan under EFG scheme, don’t worry as there are wide range of financial options available that will help the ambitious companies to grow.
FAQs
Q1. What’s this Enterprise Finance Guarantee thing even about?
It’s basically a UK government setup to help out small businesses and startups get cash when normal bank loans are just out of reach. The government basically covers a big chunk of the loan. It gives lenders the confidence to say yes to businesses they might normally just turn away, you know? Like a little extra backup for the bank.
Q2. Who can actually apply for the EFG scheme?
Most UK businesses can apply, honestly. It doesn’t even matter how long you’ve been operating for. The main things are being based in the UK, having a turnover under 41 million pounds, and wanting to borrow between 1,000 pounds and 1.2 million. Then you just get anywhere from three months to ten years to pay it all back. Pretty simple really.
Q3. Are there businesses that cannot apply for EFG funding?
Yes and it is worth checking this before you go any further. Industries including agriculture, forestry, fishing, shipping, coal, steel, medical, and education are not eligible for the scheme. If your business falls into any of those categories you will need to explore alternative funding routes instead.
Q4. How do you actually apply for a loan through the EFG scheme?
The process is similar to applying for any standard business loan. You fill in an application and submit supporting documents including a business plan, financial projections, and management accounts. The lender then assesses whether your business has the ability to repay before moving things forward.
Q5. Which lenders offer the EFG scheme?
There are around 40 lenders participating in the scheme ranging from major high street banks to smaller specialist institutions. Names like HSBC, Barclays, Lloyds TSB, and Skipton Business Finance are all among the lenders you can approach depending on what suits your business best.
Q6. What is Skipton Business Finance and what makes it different?
Skipton Business Finance is one of the government selected lenders under the EFG scheme and specialises in flexible invoice finance solutions including invoice factoring and discounting. It works with businesses turning over up to 25 million pounds and 75 percent of the loan it offers is guaranteed by the UK government.
Q7. What if my business does not qualify for the EFG scheme?
Do not write off your options just yet. The EFG scheme is one route but it is not the only one available to small businesses looking for financial support. There are grants, alternative lenders, crowdfunding platforms, and other government backed initiatives worth exploring depending on your situation and what your business actually needs.
Q8. Can a brand new startup apply for the EFG scheme?
Yes and this is one of the things that makes it genuinely useful. Unlike traditional bank loans which often require years of trading history the EFG scheme is open to businesses of any age. As long as the lender is satisfied that the business can realistically repay the loan the length of time you have been operating should not automatically rule you out.
