Small Firms Loan Guarantee Scheme and Factoring...

The Small Firms Loan Guarantee Scheme (sflgs) used to be the preserve of the high street banks but recently one or two factoring companies have been approved to offer this facility which they offer as part of an overall funding package to include factoring or invoice discounting

Small Firms Loan Guarantee (SFLG)

As a small to medium-sized enterprise, you may have viable business plans that needs funding, and for which a loan would be appropriate. However, you may be unable 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 SFLG is a joint venture between the Department of Trade and Industry (DTI) and a number of participating lenders.

Participating lenders administer the eligibility criteria and make all commercial decisions regarding borrowing.

The main features and criteria of the 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.

Factoring Solutions