Enterprise Finance Guarantee

Ok, the Enterprise Finance Guarantee (EFG) isn't a type of finance per se, but it is a way of possibly turning a "no" from a business lender into a "yes".

The Enterprise Finance Guarantee is run by the British Business Bank (BBB) on behalf of the government and works by providing the lender with a guarantee of 75% of the outstanding debt in the event that the borrower defaults.

The purpose is to help those small and medium sized businesses that are viable and considered a good credit risk, but don't have enough security to back the finance they need to grow. In this case, the lender can ask the British Business Bank for an Enterprise Finance Guarantee.

Guarantees are available on term loans, working capital, asset finance and invoice finance products from £1,000 to £1.2m and on terms from three months to 10 years

There are a few important things to remember:

  • The BBB is providing the guarantee to the lender, not to you
  • You will remain liable to the lender for the full amount of outstanding capital. In the event of default, only after the lender has pursued all other avenues, can it turn to the EFG

To be eligible you must:

  • Be UK based with a turnover of no more than £41m
  • Operate within an eligible sector
  • Not have accessed more than €200,000 of State aid in the past two years.

As we mentioned in our blog, the EFG is currently under-utilised and knowledge surrounding it is poor, even in the finance industry. We've come across situations where the lender has forgotten about it, but with our intervention, a guarantee has been applied for and agreed.

If you think you have a sound borrowing proposal, but inadequate security to support it, ask us about the Enterprise Finance Guarantee. We can explain it to you, and your lender if necessary, and then support you with the completion of your application.

Need to discuss your options?

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