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Access to finance for small businesses
17 February 2009
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In January 2009, the Government launched a support package that was intended to address the cash flow, credit and capital needs of small and medium-sized businesses in the UK. However, our members have told us that they are still struggling to access the finance available to them. Here, we explain the Enterprise Finance Guarantee Scheme and tell you what to try if you still can't access financial help.

The Enterprise Finance Guarantee
 
Under the Enterprise Finance Guarantee (EFG), the Government says it will guarantee lending to viable businesses to ensure that they can get the working capital and investment that they need.
 
The EFG is supposed to cover:
    • new term loans of between one and ten years;
    • existing lending where lenders might not otherwise refinance the debt;
    • conversion of part or all of an existing utilised overdraft into a term loan in order to release capacity in the overdraft to meet working capital requirements.
It can fund working capital and investment in businesses seeking to grow or develop.
 
 
Availability
 
The EFG is available through the following high street banks now:
    • Barclays
    • Clydesdale/Yorkshire Bank
    • HSBC
    • Lloyds TSB
    • RBS/Natwest
    • Northern Bank
 
Eligibility
 
The scheme is available to UK businesses with a turnover of up to £25 million who are currently not easily able to access the finance they need to enable them to secure loans of between £1,000 and £1 million and is available up to 31 March 2010. Loans for most businesses purposes to businesses in most sectors are eligible.
 
Participating lenders are fully responsible for the decision on whether or not it is appropriate to use the EFG in connection with a loan. There is no automatic entitlement to receive a guaranteed loan and there is no pre-qualification process for it.
 
You will need to provide the following supporting information:
    • a current business plan, including details of the purpose for which the loan is required and details of other investment in and financial commitments of the business;
    • financial projections;
    • historic trading figures;
    • statutory and management accounts;
    • information on any other publicly funded support received by your business within the past three years.
Click here for a full explanation of the Enterprise Finance Guarantee.
 
Two other schemes, the Working Capital Scheme and Capital Enterprise Fund, were also announced in January, but have yet to be rolled out. For an overview of all three schemes and how to access them, click here.
 
 
Knowledge is power
 
Before meeting with your bank to discuss finance, make sure that you read the newly-revised Statement of Principles from the British Bankers' Association. This document sets out the principles that banks have said they will work to.
 
Knowing your banks' obligations to you, the customer, can give you some leverage when discussing your financial options.
 
Click here to download a copy.
 
 
 
Online help
 
Business Link have a helpful interactive tool that can tell you what help you are entitled to from the Government.
 
You can print off the results and take this as supporting information when meeting with your bank.
 
 
Regional help
 
Don't forget that help is available on a regional as well as national level. If you feel that all commercial and government lending options have been exhausted, your local Regional Development Agency (RDA) may be able to help.
 
If you are based in England, there is a £25 million initiative called the Regional Loan Transition Fund, which can help businesses at a regional level. However, it is only available up to the end of June 2009.
 
These funds are administered by RDAs so you will need to contact your local RDA. You can find where your nearest RDA is here.
 
 
Other sources of finance
 
There are a number of Government grants and funds that may be available to your business. To check what help you are eligible for, use Business Link's Grants and Support Directory.
 
 
 
 
How the FPB can help
 
If you are a member of the FPB and have any questions on how to go about accessing financial help, call our member helpline 0845 130 1722.
 
The FPB's campaigns team has been lobbying the Government extensively on this issue with the help of it's members. Phil Orford, Chief Executive of the FPB, is meeting with the banks and the Government on Friday in order to increase the pressure to get the banks to start using the Enterprise Finance Guarantee Scheme.
 
The following is a sample of recent media coverage on this issue which includes stories from FPB members':
We are here to help and would like to hear your experiences of your bank. We can pass your experiences on to your MP or, with your consent, put you in touch with the press. Email campaigns@fpb.org to tell us if your bank has rejected an application or withdrawn finance and what the impact has been on your business.
 
 
 
 
 


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