Understanding the EFG Scheme

The Enterprise Finance Guarantee (EFG) scheme is a government-backed initiative created to assist small businesses in their loan applications. The scheme was established in 2009, shortly after the global economic crisis in the previous year which left small businesses struggling to get the finance that they needed. It was introduced as a replacement for the previous SFLG scheme which had been established since 1981.  

How does the EFG scheme work?

The EFG scheme provides the lender with a government-backed guarantee of up to 75%, against the outstanding facility balance, which aims to boost the credibility of loan applications for small businesses. It allows lending to smaller businesses that are unable to obtain finance from their lender as a result of insufficient security, meaning they are unable to meet a lender’s normal requirements.  

The EFG scheme supports several business finance products such as term facilities, overdrafts, asset finance facilities and invoice finance facilities.

Along with Invoice Finance facilities, Skipton Business Finance adopted the EFG scheme in order to aid small businesses in their plans for future growth and expansion. With Skipton Business Finance, you can have EFG in place alongside an Invoice Finance facility whether it be Invoice Discounting or Invoice Factoring.


How has it helped businesses?

Since the creation of the scheme in 2009, over 35,000 loans have been drawn out by businesses accumulating to a value of over £3.3bn as of the end of June this year. The data provided by British Business Bank this year showed that, since 2009, businesses in the wholesale and retail sectors have been the largest lending group followed by accommodation, food service and manufacturing. Loans with the value of £50,001 to £100,000 was the largest band drawn with the highest number of loans drawn overall being for businesses of 10 years or older.

There are now over 40 accredited lenders offering EFG-supported borrowing facilities to UK businesses. Skipton Business Finance has been an accredited lender since the scheme was established and, since, have provided EFG loans to the overall value of near £25million. With EFG, Skipton Business Finance has been able to aid close to 500 businesses in their aspirations for growth and expansion.  

What do I need to know?

As with all funding schemes, there are some criteria that businesses should meet in order to obtain support through EFG. Below are the criteria provided by British Business Bank:

  • Be UK based, with turnover of no more than £41 million per annum.
  • Operate within an eligible industrial sector.
  • Have a viable borrowing proposal, but insufficient security to meet a lender’s normal requirements.
  • Be able to confirm that they have not received de minimis State aid beyond £200,000 equivalent over the previous three years.

It is important for businesses to understand that the government guarantee does not provide insurance for the borrower if they are unable to repay the loan.  

At Skipton Business Finance, we are proud to support businesses who have decided to benefit from our EFG scheme. You can find out more information about EFG with Skipton Business Finance here. Alternatively, contact us at info@skiptonbf.co.uk or call us on 08000854150.