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The Small Firms Loan Guarantee Scheme

Introduction

The scheme guarantees loans from banks and other financial institutions.

Main Eligibility Criteria

UK limited companies only

Turnover less than £1.5m (£5m for manufacturing companies)

Viable business proposal

Proposal does not qualify for conventional loan due to lack of security

Term/Amounts Available

Period of loan must be between 2 and 10 years.

Newcos - Minimum amount £5k maximum amount £100k

Established (2yr + trading) maximum amount £250k

Cost

Standard commercial terms to be agreed between borrower and lender

1.5% premium payable to scheme on outstanding amount of loan

Premium is reduced to 0.5% if loan is taken at a fixed rate of interest

Guarantee

70% for newcos
85% for established companies.

Other Points of Interest/Remarks

Lending is typically at the discretion of the individual manager

Loans up to £30k are covered by umbrella agreements between the DTI and individual financial institutions

Lenders will apply an unofficial means test to borrowers to determine the individuals net worth. Joint assets such as houses are usually excluded from this subjective process

If positioned correctly it is very hard if not impossible for a lender to say No

Borrower is not required to put up any security or personal guarantee.



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