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Start-up business finance is an essential aspect for all new businesses. There are many different avenues that you can approach to obtain this start-up finance such as lenders, investors, credit cards, friends and family as well as overdrafts; out of all of these aspects the two most popular are investors, such as business angels or venture capitalists and lenders such as bank loans; however if you are a small to medium business then you may not be able to obtain a conventional loan because you do not have assets to offer as security. The Small Firms Loan Guarantee (SFLG) helps to overcome this by providing lenders with a government guarantee against default in certain circumstances. The Small Firms Loan Guarantee is a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and a number of participating lenders. On the date this article was written, the following scheme members were listed on the web: • Airdrie Savings Bank • Bank of Baroda • Bank of Ireland (NI only) • Bank of Scotland plc • Barclays Bank plc • Bibby Financial Services • Doncaster Business Advice Centre (Donbac) • Clydesdale Bank plc • Euro Sales Finance PLC • First Trust Bank (NI only) • General Asset Management • HSBC Bank plc • Lloyds TSB Group plc • National Westminster Bank plc • Northern Bank (NI only) • Northern Enterprise Ltd • One London Ltd • State Securities plc • Triodos Bank • The Co-operative Bank plc • The Enterprise Fund • The Royal Bank of Scotland • UK Steel Enterprise Ltd • Ulster Bank Ltd (NI only) • Venture Finance plc • Yorkshire Bank plc As with most schemes that are in place there are main features and criteria of The Small Firms Loan Guarantee, which are: • A guarantee to the lender covering 75 % of the loan amount, for which the borrower pays a 2% premium on the outstanding balance of the loan, payable to Department for Business, Enterprise and Regulatory Reform (BERR) • 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 • Availability to businesses in most sectors and for most business purposes, although there are some restrictions This scheme is a massive help to many growing and small businesses but as with all schemes and help surrounding money it comes with warnings and whichever of the lending banks you choose they will carry out a credit check on you and your business. It should also be noted that with the Small Firms Loan Guarantee you still need to put up some security for the 25% of the loan that isn’t guaranteed by the Government The Small Firms Loan Guarantee could be the ideal solution for you if you are looking to start up a business or expand a business or if you have the perfect business plan but you are unable to gain a bank loan due to your lack of security or if your business has an annual turnover that doesn’t exceed £5.6 million. Helen is the web master of Angel Start-ups, specialists in all aspects of the Small Loan Guarantee.
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