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.

Who Is Eligible For The Small Firms Loan Guarantee Scheme?

Guaranteed loans are available if the borrower runs or is about to run an eligible business, the proposed business activity is eligible and the loan itself is required for eligible purposes. So what is eligible?

ELIGIBLE BUSINESSES

There is an overriding limit of 200 employees. Eligible businesses are sole traders, partnerships, franchises, co-operatives and limited companies, either trading or about to trade in the near future. Turnover in the 12 months leading up to the loan application is also taken into account in establishing eligibility. Current information on turnover limits is available from the BIS’s Small Firms Loan Guarantee Unit (see Contact Points) or any of the Scheme lenders.

Groups of companies or businesses with broadly similar ownership or control will be considered as one unit, with the total number of employees and joint turnover considered against the eligibility criteria.

If a borrower has previously been involved with a business that has failed under the Scheme, he or she must declare this failure on the application form. This declaration does not mean automatic rejection, but failure to declare the previous loan may result in applications being rejected.

ELIGIBLE ACTIVITIES

Eligible activities cover many types of businesses involving goods and services. These include all manufacturing, construction firms and many service industries.

ELIGIBLE PURPOSES

Eligible purposes are business uses only. Finance may be used for developing a project, starting up trading, expanding an existing business or improving efficiency. The borrower must describe, in detail to the lender, what the money will be used for.

INELIGIBLE PURPOSES

Ineligible purposes are buying a company’s shares, buying out members of a partnership, replacing existing loan and overdraft facilities or financing interest payments.

© 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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