The Small Firms Loan Guarantee Scheme (SFLG) is a joint venture between the Department of Trade and Industry (DTI) and other participating lenders. It has been set up to help small business, with no track record or business records, to be able to have access to business loans. Participating lenders administer the eligibility requirements and make the commercial decisions. The DTI provide lenders with a guarantee against non-repayment of up to 75% of total loan amount. The lender pats the DTI 2% on outstanding balance of the loan.
The SFLG scheme has been critisised for now focusing enough on start up business, instead loaning money to large organisations with track records. These organizations should be able to source the funds from elsewhere. On December 1st, 2005, new regulations were introduced to address these criticisms.
- The new scheme is restricted to business under five years old.
- Lending limits increased to £250,000 and the period up to ten years. (previously £100,00 for business less than 2 years old)
- Eligibility levels rose to a turnover of £5.6 million. (Other criteria apply)
- Ensure that lending decisions are based on the quality of the business applying plus the borrowing history of the persons involved in the business.
- Attracting new lenders to the scheme which increase the accessibility to the SFLG loans.
You can download a list of lenders who operate the SFLG scheme from the Business Link website.