Finding a business loan that works for your company can be a challenge. Finding a lender and relevant loan that fits your income, repayment potential and even the level of money that you need can seem impossible but here we are going to look at the enterprise finance guarantee scheme and how this can be the financial aid that your business needs.

An enterprise finance guarantee loan is the perfect loan for most businesses as this enables them to apply for funding even with bad credit. This style of loan is handled between you, the lender and the government; the government has funded EFG to give a financial option to those businesses that would have otherwise been rejected from traditional lending alternatives due to lack of security or even a bad credit history. Although this may seem like a risk for the lender, this scheme is in conjunction with the government, to ensure that the payments are met as required and that they don’t end up out of pocket.

How Does The Enterprise Finance Guarantee Scheme Work?

This scheme works by leaving it up to the lender to make the decision as to whether you should be accepted. The payments are then calculated and processed between you and the lender, with a quarterly fee being paid to the government. Due to this, this style of loan can become significantly more expensive than other more traditional loans, however, it does add an extra level of security to your business. This then allows you to borrow a significant amount to help aid your business when you may have otherwise been rejected.

What Is The Eligibility Criteria For EFG Loans?

In order to qualify for the EFG scheme, there are a number of criteria that need to be met. Below is a small list of some of the eligibility criteria that your business will need to be aware of:

  • You need to be operating in the UK
  • You can borrow finance between £1,000 and £1.2 million
  • The repayment period will be between 3 months and 10 years
  • Your business must have a turnover of less than £41 million per year
  • You must show a robust business plan

It is important to disclose any information that is required of you to ensure that your company follows these guidelines. Although these may also differ depending on which of the 200 lenders on offer that you choose, it is important to ensure that your business fits all these guidelines in order to promote a fast loan acceptance and turnaround.

Enterprise Finance Guarantee Loan Principles

When applying for an EFG loan there are some key principles that your company must have in order to qualify; this is important as this can be the difference between a successful and unsuccessful loan application. The enterprise finance guarantee scheme was put in place to help you get the most out of the money that you are borrowing, after all.

The first of the EFG loan principles that applicants have to follow is that they have to produce a well thought out business plan, which includes how they intend on spending the loan, with a prospective cash flow for the future alongside it. It is also important to note that these loans can be used for refinancing your business should you be accepted, making this the ideal loan for getting the money that you need, as well as the flexibility to spend it.

As stated above one of the main principles when applying for an enterprise finance guarantee loan, is having a steady business plan. This is so that the lender can see what your business plans to do with the money that you are borrowing as well as ensuring that it is a financially viable investment.

Types Of Lenders Available For The EFG Loan

When applying for an EFG loan, there are multiple different lenders that you can choose from that will all provide you with their own repayment criteria and methods. You should always check how many instalments you will be required to pay, as it is crucial that your loan’s repayment schedule is cost effective for your business and is easily manageable. Below is a short list of some of the types of lenders that you can borrow from and how each will be beneficial for your business when applying for an EFG loan.

Bank – Banks are probably the most popular lender of choice when it comes to submitting business loan applications. However, due to their stringent restrictions, they are likely to reject over half of the applications that they receive and can be particularly difficult if your business has a poor or limited credit history.

Privately Run Banks/Lenders – different to the standard high street bank, these privately run institutions are more open to a creative outlook on a business plan. This is beneficial for new or smaller businesses, as they are more likely to offer money to creative start-ups and even take risks to help a business thrive. Although this can seem too risky to some, this is often one of the most popular choices as it provides creative freedom and a better chance of being successful.

Although there are other forms of lenders that can help to ensure that you get the money you need under the enterprise finance guarantee scheme, these two are some of the most common and most used methods by businesses, making them both a stable first choice.

With all this in mind, finding the money you need with an EFG loan could not be easier. All you have to do is get in touch with one of our experts today or compare business loans for the right lender. Give us a call on 0203 880 9880 to get started and begin running your business the way that you want with an enterprise finance guarantee loan.