Enterprise Finance Guarantee (EFG)

The Enterprise Finance Guarantee is 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 is designed for businesses that have a good track record but not enough security to get a loan – it’s not meant for startups. The government-owned British Business Bank administrates the programme.

You can apply 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 guarantees to take up to 75% of the lender’s net (post-recovery) loss if your business defaults on payments. This means the lender is exposed to only part of the risk so, in theory, is more likely to lend to you.

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

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

EFG supports 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 might be eligible for EFG support if you:

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

You’ll find more information about Enterprise Finance Guarantee on the British Business Bank’s website.