Enterprise Finance Guarantee

Facilitating lending to the UK’s smaller businesses

Between its launch in 2009 and its closure in 2020, the British Business Bank’s Enterprise Finance Guarantee (EFG) supported the provision of over £3.3bn of finance to more than 35,000* smaller businesses in the UK.  

EFG facilitated lending to smaller businesses that were viable but unable to obtain finance from their lender due to having insufficient security to meet the lender’s normal security requirements.

In this situation, EFG provided the lender with a government-backed guarantee of up to 75%, against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

EFG supported a wide range of business finance products, including:

• Revolving facilities, such as overdrafts
• Invoice finance facilities
• Asset finance facilities

To be eligible for support via EFG, the small business had to:

• Be UK based, with turnover of no more than £41 million per annum
• Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support)
• Have a sound borrowing proposal but have inadequate security to meet a lender’s normal requirements
• Be able to confirm that they have not received other public support of de minimis state aid beyond €200,000 equivalent over the previous three years

EFG guaranteed loans to fund the future growth or expansion of a business, from £1,000 to £1.2 million. Finance terms were from three months up to 10 years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

Note: A limited number of further eligibility restrictions to apply. Full details can be found here (.pdf,  469kb).

How did a small business apply for an EFG-supported borrowing facility?

It was simple to apply and took no longer than a standard loan application.

Any small business interested in EFG would have, in the first instance, approached one of the EFG accredited lenders with their borrowing proposal.

If the EFG lender could offer finance on normal commercial terms without the need to make use of EFG, they would do so. Where the small business had a sound borrowing proposal but no, or inadequate security, the lender would consider the small business for support via EFG.

Decision-making on whether a small business was eligible for EFG was fully delegated to the accredited EFG lenders. These lenders ranged from high-street banks, to challenger banks, to asset based lenders, through to smaller specialist local lenders.

Please note

• As with any other commercial transaction, the borrower is always responsible for repayment of the full value of any facility supported by EFG
• The EFG guarantee is to the lender and not the small business
• All small businesses supported via EFG were required to pay a 2% annual fee to the government, as a contribution towards the cost of the scheme
• This fee was payable on a quarterly basis and was collected by direct debit, directly from the small business’s bank account