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.

How To Apply

Application forms are available only from lenders involved in the Small Firms Loan Guarantee Scheme. In the first instance applicants should contact the lender with a view to obtaining conventional finance. Only if conventional lending is denied, through lack of security or track record, can the Small Firms Loan Guarantee Scheme be considered.

Applicants must present the lender with a clear business plan and financial forecasts both to test the business’s viability and to identify finance requirements.

Before offering a borrower a Small Firms Loan Guarantee Scheme loan, lenders have to satisfy themselves that they would have offered conventional finance but for lack of security. They should establish that all available personal assets have been used for conventional loans. Personal assets or personal guarantees cannot be taken as security for a Scheme loan. It is the lender’s decision whether or not personal assets are available to be used for conventional lending. However, the borrower may be required to pledge premises, machinery and other possessions used in connection with the business as security for the guaranteed loan. The lender will usually take a fixed or floating charge over such assets. Security taken by the lender in respect of guaranteed lending will always apply to the whole loan, not just the proportion not covered by the guarantee.

© 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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