Small Firms Loan Guarantee Scheme

Hello %%First Name%%

If you've tried to get a bank loan for business purposes and failed, it's definitely worth knowing about the Small Firms Loan Guarantee Scheme.

The scheme is aimed at those businesses that have tried to get a conventional loan but failed because of insufficient security. The scheme provides a government guarantee to the lender for 75% of the loan should you default on the loan and so helps provide the bank with the security they need to be able to lend.

The scheme isn't available if normal conventional loan finance can be obtained. Suitability to obtain normal bank loan funding should be explored first.

It is available for loans of between £5,000 and £250,000 over a term of up to 10 years. It is a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and the banks but all commercial lending decisions are taken by the banks.

In exchange for the guarantee, a premium of 2% of the outstanding balance of the loan is charged each year on top of the banks normal arrangement fees and interest.

Basic guidelines for eligibility are...

• Must be a UK business with an annual turnover of no more than £5.6million
• The business should not have been trading for more than 5 years
• It is available to most business sectors although there are some exclusions

Whilst most banks are able to offer the Small Firms Loan Guarantee Scheme, many seem to not bring it to the attention of small and startup businesses. So if, you've been declined funding or are looking to obtain funding ensure you bring it to the attention of the bank manager.

If you would like us to introduce you to banks that can help or to assist you in preparing necessary business plans, cashflow and profit forecasts we can of course do that.

For help and assistance with this or for any of your accountancy and tax needs, please give me a call. I'm very happy to visit you without charge for a consultation to discuss how we could help you further.