The UK Government will continue to guarantee business loans for another year.
Between April 2010 and March 2011, the Enterprise Finance Guarantee (EFG) facility will support up to £500m of bank loans to businesses which lack the security or track record to obtain commercial lending.
The scheme is available for firms with an annual turnover of up to £25m, looking for loans of up to £1m for a period of up to 10 years.
Within the framework of the EFG facility, the Government provides the lender* with a guarantee of 75% of the loan to SMEs.
The collateral can be used to support new loans, refinance existing loans at risk due to the deteriorating value of security, convert part or all of an existing overdraft into a loan to release capacity to meet working capital requirements, guarantee on invoice financing facilities to support an agreed additional advance on a companies debtor book and guarantee new or increased overdraft borrowing for SMEs experiencing short term cash-flow difficulties.
According to official figures from the UK Department for Business, Innovation and Skills, since its launch in January 2009, it has provided more than 6,850 businesses with loans, totalling over £692m.
More than £1bn of eligible applications from almost 9,000 SMEs have been granted, are being processed or assessed.
During the same period, EFG loans have been used to help companies with working capital, while a significant proportion has been used for growth and investment, including business expansion, purchasing new equipment or developing a new project.
*The guarantee is available through the following lenders:
Airdrie Savings Bank, Alliance and Leicester Commercial Bank, Allied Irish Bank, Bank of Baroda, Bank of Cyprus UK, Bank of Ireland (NI only), Bank of Scotland, Barclays, Big Issue Invest, Bolton Business Ventures, Braveheart Investment Group, Business Enterprise Fund, Business Finance Solutions, Capitalise Business Support, Close Brothers, Clydesdale Bank, The Co-operative Bank, Cumbria Asset Reinvestment Trust, Donbac, DSL Business Finance, First Trust Bank (NI only), GLE oneLondon, HSBC, IGF Invoice Finance, Lloyds Group, NatWest, NEL Fund Managers, Northern Bank (NI only), The Royal Bank of Scotland, State Securities, South West Investment Group, Triodos Bank, UK Steel Enterprise, Ulster Bank (NI only), Venture Finance, Whiteaway Laidlaw Bank, Yorkshire Bank.