Summary:- How to guarantee a loan

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small firms loan guarantee scheme - uk

It is well known that you can raise a loan as long as you have the money to guarantee the loan.

The UK government introduced a scheme to overcome this 'catch22' impasse by acting as guarantor for 75% of the proposed loan. The SFLG scheme, so shortened, is a joint venture between the Department of Trade and Industry and a number of approved lenders - banks and other financial institutions.

The loans are provided by the approved lenders who make all the commercial decisions about borrowing. All applications should be made direct to one of the approved lenders.

The cost of the guarantee is two per cent per year on the outstanding amount of the loan, payable to the Department of Trade and Industry. This is in addition to the interest on the loan from the approved lender.

Applications may be made from UK limited companies, partnerships and sole traders but there are many restrictions as to the type of business and how the loan will be used.

The scheme guarantees 75% of loans from £5k to £250k over 2 to 10 years with staged repayments and the possibility of repayment holidays - most useful over tricky cashflow periods.

If you can match the requirements, this is a very good deal and 'cheap money'.

More information may be found at the DTI web site and in their booklet (in Adobe .pdf format)


Approved Lenders

Allied Irish Banks/First Trust Bank
Bank of Ireland
Bank of Scotland plc*
Barclays Bank plc*
Clydesdale Bank plc
HSBC Bank plc*
Lloyds TSB Group plc*
National Westminster Bank plc*
Danske Bank Ltd
Northern Enterprise
One London Ltd**
Triodos Bank
The Co-operative Bank plc*
The Royal Bank of Scotland*
UK Steel Enterprise Ltd
Yorkshire Bank plc*
Yorkshire Enterprise Ltd

*Operates the Small Loan Arrangement
**Operates the Small Loan Arrangement only




Before approaching anyone for a business loan, it is essential to make up a business plan in a format that can be easily read by the prospective source of funds.
It is important for the main facts to be brief but complete and supported by further documentation if required.
A business plan that resembles a short novel full of hype is not the way to attract backers.
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