Small Firms Loan Guarantee Scheme

The Small Firms Loan Guarantee Scheme has been suspended. The type of lending previously provided under SFLG – to businesses that lack collateral and/or track record – will still be available under the new Enterprise Finance Guarantee Scheme.

Appendices

APPENDIX A : Activities Where Restrictions Apply

Agriculture and horticulture – loans for the production, processing and marketing of agricultural products are available, but there are restrictions. Guidance should be sought from BIS loan Guarantee Unit in all cases. No loans can be approved under the Small Loans Arrangement.

Authors, music composers and certain other own-account artists – including self employed artists, authors, composers, playwrights, musicians, actors, theatrical companies etc. are not eligible. Commercial and graphic artists are eligible.

Banking, finance and associated services – any activity that involves granting of finance or a financial service to clients is ineligible, such as banks, deposit takers, building societies; companies involved in granting loans, mortgages, hire purchase or credit services; mortgage brokers; venture capitalists; seedcorn finance companies; stock brokers. Accountants, auditors, management service companies, such as bookkeeping firms, tax advisors,. management consultants,. business advisors and companies that lend support to small firms on financial matters without actually supplying funds are eligible.

Betting and gambling – all betting shops, totalisers, casinos, lotteries, bingo halls and amusement halls are ineligible.

Commission agents – those primarily engaged in acting as intermediaries between sellers and buyers or in conducting business on another company’s behalf are not eligible. The type of activity excluded is one where the agent merely puts a seller in contact with a buyer without buying and reselling the product themselves and without adding value to the product or service. Fees are usually taken as a proportion of the business passing through eg. self-employed sales agents. It is not intended to exclude all businesses that earn money from commissions, but only those who act as agents for a single principal or single group of companies. Firms which provide a business service to a range of clients but take their fee as a proportion of the business passing through, such as shipping and export agents, employment agencies, are eligible.

Education – only businesses offering courses that lead to vocational qualifications and skills (i.e.. those skills and qualifications directly usable in a job) are eligible. All other forms of education, including nursery schools which offer a curriculum of lessons, piano tuition, and musical tuition are ineligible. Day schools and playgroups for young children which do not offer lessons are eligible, as is sports coaching.

Fisheries – consideration will be given to applications in respect of capital investment in premises and equipment and vessel modernisation. Loans for operating costs (day-to-day running costs), advertising brand products, vessel construction and purchase of a vessel, or equipment, that would lead to an increase in fishing effort are not eligible. Guidance should be sought from the BIS Loan Guarantee Section in all cases. No loans can be approved under the Small Loans Arrangement.

Forestry – all activities connected with the cultivation of trees and maintenance of forests for commercial use, including tree nurseries are ineligible. The processing of felled timber in saw mills is eligible provided that the operation is not just part of a wider forestry activity.

Insurance and associated services – companies and societies primarily engaged in transacting all types of insurance business, including brokers and agents are not eligible.

Medical and health services and veterinary services – all activities where registered and unregistered medical, other health care or veterinary personnel use their skills to treat patients are not eligible. Rest or Convalescent homes where the care provided does not necessitate the use of specialist medical skills and where medical help is brought in from outside when needed are eligible. Nursing homes where medical care is not the major activity are also eligible. Fitness and health clinics and firms offering health advice are eligible where they do not depend on the input of qualified medical staff.

Owning and dealing in real estate – land and estate owners, property investment companies and those that derive their income from owning and letting property are not eligible, as is any dealing in land or property for speculative gain. Building firms who buy land or property to develop or refurbish it and who employ the building workers themselves are eligible. Businesses that buy land or property and then employ subcontract firms to do the work are property developers and are not eligible.

Postal services – postal services charging less than £1.00 for each item carried are not eligible. The pick-up, transport and delivery of letters and mail-type parcels and packages by courier, parcel and messenger service, charging a minimum of £1.00 for each item carried is eligible.

Professional sports players and sporting organisations – including organisations which promote sport in general are not eligible. Sports instruction and sports facilities are eligible.

Public administration, national defence and compulsory social security – all publicly owned bodies and companies are not eligible.

Ticket and Travel agents – all agents who act as intermediaries between the holidaymaker and the travel holiday provider are not eligible. Those companies who provide or “manufacture” the travel or holiday, rather than booking places on it, such as tour operators are eligible.

Transport – all forms of road (including taxi and cab hire), rail, water, and air transport (including those run as tourist attractions, and living museums) are ineligible. See “Postal Services” for Courier Operators.

For further details of restrictions contact BIS’ Loan Guarantee Unit or your lender.

© The Small Firms Loan Guarantee Scheme guide has been reproduced from information published by the Department of Business, Innovation and Skills (BIS) and in accordance with Crown Copyright.
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