Small firm loan guarantee scheme

This is available, subject to criteria, to any small to medium-sized business which has a viable business plan which identifies a loan requirement but is unable to obtain funding with a bank or finance company because there are no assets available to offer as security.

The Small Firms Loan Guarantee (SFLG) provides lenders with a government guarantee, effectively the required security, against default in certain circumstances. The SFLG is a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and a number of participating lenders.

The lenders review the eligibility criteria and make the decision regarding borrowing.

The main features and criteria of the scheme are:

• a guarantee to the lender covering 75 per cent of the loan amount, for which the borrower pays a 2 per cent premium on the outstanding balance of the loan, payable to BERR
• the ability to guarantee loans of up to £250,000 and with terms of up to ten years
• availible to qualifying UK businesses with an annual turnover of up to £5.6million
• availible to businesses up to five years old
• availible to businesses in most sectors and for most business purposes, although there are some restrictions