There are two ways of obtaining business  finance for MBOs. Firstly banks can do cash flow lends or an asset based lender can finance the assets within the business to provide the cash. The problem with banks is that during the recession they have had their fingers burnt with cash flow lends. Significant amounts of money are lent against the future profitability of the business. There can be potentially little security for the banks and  it easy to see why the banks have been writing off significant amounts of bad debt. During 2009 banks were doing hardly any cash flow lends however during 2010 we can expect this to increase as the economic recovery start to take effect and the banks relax their cautious underwriting approach.

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We are now finally starting to see some action from certain banks in providing efgfunding. EFG Funding or the Enterprise Finance Guarantee Scheme replaces the old Small Firms Loan Guarantee Scheme. The new scheme is supposed to be more flexible than the old and enables banks to lend money to busines users where there is a lack of tangible security. however it doesnt make a bad deal good and the banks will only advance if the deal ticks all the right boxes. To date only two banks are responsible for 90% of the lending. XL Business Finance can provide a free asessment of your eligibility for a loan under the scheme.