Government Schemes

The Government has developed a number of schemes and measures to help SMEs get access to finance and support them in their growth.

Here are the primary schemes designed to help small and medium-sized businesses grow in 2013…

Enterprise Finance Guarantee Scheme (EFG)

The Enterprise Finance Guarantee (EFG) scheme is designed to facilitate loans to viable SMEs that lack the security or track record for a busienss loan.

The government provides lenders with a 75% guarantee for each loan and there are 44 accredited lenders throughout the UK.

SMEs with a turnover below £41 million can seek loans under EFG from between £1,000 and £1 million, repayable between 3 months and 10 years.

For more information go to:

Smart Scheme (R&D)

Previously known as Grant for Research & Development, the Smart scheme has been devised by the Technology Strategy Board to offer funding to SMEs to allow them to undertaje in R&D projects.

Smart scheme funding is available to pre-startups, startups and small & medium-sized firms for proof of market, proof of concept or the development of a prototype.

For information and application to Smart, go to:

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) is designed to help small, high risk firms raise finance by offering tax relief to investors who purchase new shares in those businesses.

Investors can invest up to £1 million and receive 30% of the cost of their investment as an income tax relief.

Capital Gains Tax (CGT) liability on disposal of of assets can be deferred if the money is reinvested in EIS shares within a certain period.

Investors can invest in SMEs with fewre than 250 employees and assets below £15 million.

For more information go to:

UK Export Finance (UKEF)

UK Export Finance (UKEF) is a government department with the sole puropse of supporting UK exporters.

The prime method of support is working with UK banks to provide exporters with trade export finance and includes buyer and supplier credit facilities, project financing, ecxport insurance and bond insurance policies and credut guarantee schemes.

The full range of UKEF products and services can be found at:

UK Innovation Investment Fund (UKIIF)

Designed to drive economic growth and creat ehighly skilled jobs, the UK Innovation Investment Fund (UKIIF) is for businesses with significant growth opportunities.

UK SMEs in strategically important sectors are ideal for UKIIF funding with digital, life sciences, clean tech and advanced manufacturing all being prime cabdidates for UKIIF.

With The Hermes Environmental Innovation Fund of £130 million and the European Investment Fund’s UK Future Technologies Fund at £200 million, SMEs have two large funds to access.

For more information go to:

Enterprise Capital Funds (ECFs)

Many investors proefer to make large investments in later stage compoanies leaving an equity gap for early stage businesses. That gap is bridged by Enterprise Capital Funds (ECFs).

Using a mix of private and government capital, ECFs are available from:

Seed Enterprise Investment Scheme (SEIS)

Set up in April 2012 the Seed Enterprise Investment Scheme (SEIS) helps small early stage businesses raise equity finance.

By offering tax reliefs to investors, shares held for at least 3 years earn a 50% tax relief to a maximum annual investment level of £100,000.

Firms with less than 25 employees and assets under £200,000 are eligible,

For more information go to:

Venture Capital Trusts (VCTs)

The Venture Capital Trust (VCT) scheme encourages investment in small, non-listed, higher-risk businesses in return for tax incentives.

With a maximum investment by an inidividual in any year of £200,000 the investment will qualify for 30% tax relief but the shares must be held fro 5 years from the date of issue.

VCTs must be approved by HMRC and eligible companies should have fewer than 250 employees with assets of less than £15 million.

Companies can raise a maximum of £5 million in any 12 month period.

More information on VCTs can be found at:

Business Angel Co-Investment Fund

The £50 million Business Angel Co-Investment Fund is for high growth, early stage SMEs, particularly in areas that are the worst affected by public spending cutbacks.

Funded by a grant from the Regional Growth Fund, the Business Angel Co-Investment fund is for equity investments from £100,000 to £1 million alongside those of business angel syndicates across England.

There are restrictions, however; both geographically and up to 49% of any investment round.

For more information see:

StartUp Loans

Young entrepreneurs, aged 18-30 can apply to the Start-Up Loan Company for an unsecured loan to help kickstart a new business.

The initiative, created by David Cameron’s Enterprise Advisor, Lord Young of Graffham, and chaired by serial entreprenuer and former Dragons’ Den panelist, James Caan, has over £100 million available to help support new businesses.

Typical loans are, on average, around £2,500.

In addition, budding young entrepreneurs receive quality business mentoring and a startup loans kit with a number of money-saving offers.

For more information go to:

National Loan Guarantee Scheme (NLGS)

Introduced in March 2012, the National Loan Guarantee Scheme (NLGS) helps give firms cheaper access to finance by making business loans less expensive.

Under the scheme the Government guarantees unsecured loans on borrowing by participating banks. This allows the banks to borrow at a cheaper rate and they are then obliged to pass on that benefit to businesses through cheaper loans.

Participating banks inckude the Bank of Scotland, Barclays, Lloyds TSB, Lombard, Natwest, Royal Bank of Scotland (RBS), Santander and Ulster Bank.

UK-based businesses with turnover under £250 million can apply for loans under the NLGS.

For further details go to:

Community Development Finance

Community Development Finance Institutions (CDFIs) are independent financial insitutions serving specific disadvantgaed groups or disadvantaged geographicak areas.

Under the Communtiy Development Finance Association (CDFA) a £30 million grant from the Regional Growth Fund has been matched by an additional £30 million from the Co-operative Bank and Unity trust Bank.

Lending can be used by micro businesses (those with fewer than 10 employees), small businesses and social enterprises.

Investors in disadvantaged community areas are given further incentives through the Community Investment Tax Relief (CITR) scheme, giving 25% tax relief over 5 years.

For more information take a look at:

The Community Development Finance Association’s (CDFA) website:

The CDFA finance finding tool

Examples of CDFIs can be found here:

Guidance on the CITR scheme:

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