Enterprise Finance Guarantee (EFG)

The Enterprise Finance Guarantee was one of the UK government’s flagship business loan programmes, designed to support lending (up to £1.2m) to businesses that would otherwise be turned down for finance because they have insufficient security to meet a lender’s normal requirements. The programme provides lenders with a government-backed, partial guarantee – this can in theory turn a lender’s ‘no’ credit decision to a ‘yes’.

The government’s Enterprise Finance Guarantee (EFG) programme was designed for businesses that had a good track record but not enough security to get a loan – it’s not meant for startups. The government-owned British Business Bank administrated the programme.

You could’ve applied for an EFG loan via any of the British Business Bank’s commercial partners, which include high street banks, challenger banks and independent lenders. Under the programme, the government guaranteed to take up to 75% of the lender’s net (post-recovery) loss if your business defaulted on payments. This meant the lender was exposed to only part of the risk so, in theory, was more likely to lend to you.

Any lender (or finance provider) would still go through a due diligence process with you before they gave you a loan, but the EFG programme effectively widened the eligibility criteria to help more businesses get finance. 

You payed interest and fees to the lender as you would with any loan. You also payed a quarterly fee to the government. An EFG loan was more expensive than other business loans, but it might make the difference between getting the finance and not.

EFG supported a wide range of loans, including:

• term loans (i.e. medium-term and long-term loans)
• revolving credit facilities
• overdrafts
• invoice finance facilities
• asset finance facilities.

You would’ve likely been eligible for EFG support if you:

• were UK-based
• had an annual turnover of no more than £41m
• operated within an eligible industrial sector (a small number of industrial sectors are not eligible)
• had a sound borrowing proposal and a robust business plan but inadequate security to meet a lender’s normal requirements.

Find out more about all business loan types available through Swoop.