The Enterprise Finance Guarantee (EFG) is a Government loan guarantee scheme to enable lending to small and medium sized enterprises (SMEs) which can demonstrate that they have sufficient cash-flow to meet lenders loan affordability requirements, but are lacking adequate security to obtain a commercial bank loan.
EFG is principally used to support loans of between £1,000 and £1 million, and repayment terms between three months and 10 years. EFG also supports overdrafts and invoice finance facilities, which have shorter repayment terms of two years and three years respectively.
A business will always apply for a commercial loan before EFG is considered. If a business meets the lenders’ loan affordability requirements, and would have been offered a traditional bank business loan if they had adequate security, then EFG is worth considering. Businesses should ask about EFG during their loan application.