Any facilities offered by lenders and secured under the Enterprise Finance Guarantee should be repaid within the terms agreed between the borrower and the lender up to but not exceeding the maximum period permitted for that particular loan facility.
EFG supports bank lending to businesses with an annual turnover of up to £25 million seeking loans of £1,000 through to £1 million, repayable over a period of between three months and 10 years.
The overdraft borrowing guarantee top-up and the invoice finance guarantee top-up introduced on 30 September 2009 is limited to a maximum repayment term of two and three years respectively.
Accredited EFG lenders have the discretion to agree capital repayment holidays where they deem appropriate.
There are three main conditions for a business being offered an EFG loan application:
The business meeting the lender’s normal commercial criteria in relation to the viability of the business and serviceability of the loan. This judgment will vary according to the lender concerned.
The lender determining that use of EFG, rather than a normal commercial loan, is necessary because of no or insufficient security available on the part of the business.
The business meeting the basic EFG eligibility criteria.
Each lender has access to the EFG web portal through which they administer the EFG eligibility criteria. The main EFG eligibility criteria, with respect to the size of loan, purpose of loan, turnover size, business sector, etc., is detailed on the BIS website:
Businesses granted loan facilities backed by the Enterprise Finance Guarantee are given six months within which to draw down the facilities offered.
The current conversion rate from offered to drawn loans exceeds 80 per cent. and is expected to rise. Given the scheme was launched in January, it is too early to make any comprehensive assessment of the reasons behind a few businesses deciding not to draw down loans offered under the scheme.