Frequently asked questions about the EFG Scheme


Enterprise Finance Guarantee

Q. What is it?

A. The EFG Scheme will support new lending by banks to viable SMEs with working capital or investment needs.

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Q. Who will benefit from the scheme?

A. The EFG Scheme is open to businesses with an annual turnover of up to £25 million, seeking finance of £1,000 to £1 million, repayable over a period of between 3 months and 10 years. Most businesses in most sectors will be eligible for the scheme. However, the coal sector is excluded from the scheme and there are restrictions to some parts of the agriculture sector.

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Q. What types of lending will this cover?

A. The guarantee can be used to support new loans, refinance existing loans or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital needs. However this funding cannot be used to refinance existing loans solely for the purpose of releasing equity or to benefit from cheaper borrowing costs.

The EFG was extended in late 2009 to include borrowing by way of overdraft and invoice finance, to help meet customer's individual cash flow circumstances.

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Q. How much of the loan will Government guarantee?

A. Government will guarantee 75 per cent of the facility.

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Q. How long will the scheme run for?

A. In the 2009 Pre-Budget Report, the EFG was extended to run until March 2011.

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Q. Does the EFG charge any interest?

A. If you qualify for the Government guarantee and borrow under the EFG scheme, in addition to your regular loan repayments and any arrangement fee paid to the Bank you need to pay a premium to the Government. Paid quarterly to aid cash flow, the premium is based on 2% per annum on the reducing loan balance.

If you think your business could benefit from EFG funding, then get in touch with your local Business Manager for further support and guidance.

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