Loan Guarantee Scheme

The Small Firms Loan Guarantee Scheme (SFLGS) is a government backed scheme created to give small & medium enterprises (SME's) the opportunity to borrow for expansion although the business does not have the necessary security to obtain a normal commercial loan. The scheme is available through the high street banks (although some are not eager to administer it) and other specialist lenders. Details of the scheme are as follows:

• Available to – sole traders, partnerships, limited companies after normal financing methods have been exhausted. The business must be less than 5 years old, with less than 200 employees, and annual turnover less than £5.6M
• DTI guarantee – 75% of the loan, for which a charge of 2% per annum of the loan outstanding is made.
• Company/personal guarantees – required if assets are available to support. Not required if the business or its owners have no free assets.
• Loans to be used for any type of business expansion. A sound business case is required, which is will include a business plan.
• Loan amount – from £5,000 to £250,000, available over up to a ten year period, with capital repayment holidays if required.
• Interest – either fixed or variable rate as agreed between borrower and lender, normally at 3% to 4% over base. The bank will also charge an arrangement fee.

NFS can assist with business planning in order to submit an SFLGS application (reasonable fees chargeable for this service), and also in finding the most appropriate lender for your business (small commission charge as lenders do not pay commission on these loans)..