Small Firms Loan Guarantee Scheme (SFLGS)
Small Firms Loan Guarantee advice from Access Debt Solutions.
As a small to medium-sized business with growth potential, you may find that you have a viable business plan that needs funding but cannot obtain a conventional loan because you do not have assets to offer as security. In such instances, the Small Firms Loan Guarantee Scheme (SFLGS) may provide the solution.
The Small Firms Loan Guarantee Scheme is a joint venture between the Department of Trade and Industry (DTI), banking institutions and, more recently, has also become available via invoice discounting and invoice factoring companies.
Providers of the scheme make a commercial underwriting decision against eligibility criteria and make all commercial decisions regarding borrowing.
The main features of the Small Firms Loan Guarantee Scheme are:
- A guarantee to the lender covering 75 per cent of the loan amount, for which the borrower pays a 2 per cent premium on the outstanding balance of the loan, payable to the DTI.
- The ability to guarantee loans of up to £250,000 and with terms of up to ten years.
- Availability to qualifying UK businesses with an annual turnover of up to £5.6million and which are up to five years old. This is generally determined by the date the business came within the charge of corporation tax (for a company) or became liable to pay class 2 National Insurance contributions (for a self-employed individual). In the case of a business transfer the five-year age limit applies to both the business making the acquisition and the business being acquired.
- Availability to businesses in most sectors and for most business purposes, although there are some restrictions.