Enterprise Finance Guarantee scheme - Your experience?

bennyowen

Hi All,

Enterprise Finance Guarantee scheme is a business credit facility supported by the UK government but provided by banks and other non-financial institutions.


Have you applied for Enterprise Finance Guarantee scheme?

Do you have any experience - succeeded or failed?

Please share your experience:
e.g. length of time from application to end; bank or non-bank provider; which bank; succeed or fail; reason for success or failure; interest rate given, any worries about it; etc.

Brassedoff

I will be honest the scheme in principle has or is great, the let downs are the Banks. They try and divert you down the regular stream, if you pass with the security, fine, if not they are not interested.

I have applied for a range of loans, grants and awards from various sources, I understand funding is down by some 60% or something.

All these applicationss were supported by strong applications, strong BP's. the banks appear to want to use their own criteria. If you fit, you get offered loans at their rates, if not, it's no.

As for rates, Lloyds TSB in Birmingham offered a client who is going through the process now, base + 6

bennyowen

Thank you Brassedoff for your honest opinion.

It will be refreshing to know other people's opinions on the scheme.

Savvy_Sue

May I ask why you're asking?

paulwf

I've used it, in fact I couldn't have started my business without it. I was in a position of being able to put in a lot of cash into the business but no security to back up the loan needed for the rest.

It does limit your choice of banks and the ones that do deal with it struggle to get their head round it and find the right person to process it, they just didn't seem to deal with that many EFG applications so weren't used to it basically. It takes a bit of extra time and a couple of extra hurdles but if you're sensible and get the funded sorted in plenty of time it's no big deal.

Brassedoff

That's most probably why I have found all the business account people defer back to their normal streams. Or as all my applicants had ample security the bank thought they would do a smash and grab.

bennyowen

Savvy_Sue wrote: »

May I ask why you're asking?

I am a student and I was given the assignment to find out about Enterprise Finance Guarantee scheme.

bennyowen

paulwf wrote: »

I've used it, in fact I couldn't have started my business without it. I was in a position of being able to put in a lot of cash into the business but no security to back up the loan needed for the rest.

It does limit your choice of banks and the ones that do deal with it struggle to get their head round it and find the right person to process it, they just didn't seem to deal with that many EFG applications so weren't used to it basically. It takes a bit of extra time and a couple of extra hurdles but if you're sensible and get the funded sorted in plenty of time it's no big deal.

What is the proportion of your cash and the EFG loan? 50/50?
What "extra hurdles"?

paulwf

Brassedoff wrote: »

That's most probably why I have found all the business account people defer back to their normal streams. Or as all my applicants had ample security the bank thought they would do a smash and grab.

EFG is intended only for those that can't provide security, if you've got security then you're not eligible (or that's what the bank told me). It's a good scheme IMO, if you've got a good business plan and are putting in some cash but don't own property then EFG are effectively guaranteeing the loan for the bank. It isn't intended as a way of not risking your house if you already have property and want a business loan, if they did that everyone would use EFG and there would be no loan capacity left for anyone without security.

paulwf

bennyowen wrote: »

What is the proportion of your cash and the EFG loan? 50/50?
What "extra hurdles"?

I put in over 50% cash. Extra hurdles means that as well as having to go through the normal loan approval process the bank then needs to take that decision to EFG and apply for security for the loan on your behalf. That's extra time, hassle and paperwork for you and the bank. Not an issue as long as you are patient and the bank can find a manager who is familiar with the process.

That was 3 years ago though so I've no idea if banks are more or less up to speed with it now. At the time my bank manager said there was a high default rate on EFG loans so I think there was a greater degree of caution with my application, plus banks like to keep everything in house.

You pay a small loan premium (think of it like an insurance policy) and they'll want quarterly p&l figures, once it was set up it hasn't been any extra effort over a normal loan though.

I'm by no means an expert, that's just my experience from 3 years ago and I had to learn a lot about it as the bank didn't really know how to handle it at first.