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IS EFG Funding Working?

We have received numerous enquiries about Enterprise Finance Guarantee Funding ( EFG).  EFG was supposed to be a more flexible replacement of the old Small Firms Loan Guarantee Scheme. The new scheme opened funding up to a larger cross section of businesses and is less restrictive in terms of eligibility.

The scheme was to provide additional security to the banks to enable them to be more flexible when approving business loans. For example if a bank liked the look of a deal and the only reason they couldn’t get approval was because of lack of security then this is where the SFLG kicks in. It may also be worth mentioning that all other forms of tangible security from the business and its directors need to have been exhausted. Therefore if a director has plenty of equity in his personal house  the bank must use this before a business is eligible for the EFG funding. However the EFG doesn’t provide security for the whole of the loan still leaving the finance company with a certain amount of exposure. This leaves us with a bit of a problem.  Banks being banks want their cake and they want to eat it. Not only do they want the maximum mount of security, the loan must meet all their normal lending criteria before they will even consider a customer for EFG funding. Therefore if the deal doesn’t stack up in their eyes it won’t even get passed first base.

All the banks publically advertise that they do the EFG funding but in reality only 2 of the high street banks are responsible for 90% of the advances. This doesn’t help if you are not with one of these two banks.  In addition we have been seeing a number of approvals recently from high street funders offering very high rates comparable to sub prime funders. They are effectively saying we don’t want to do this deal.


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XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

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XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.


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