Have you received money through the government's Enterprise Finance Guarantee scheme?

DanMartin · Mar 23, 2009

Business secretary Peter Mandelson today announced that 1,300 eligible loans worth almost £145m have been processed through the government's Enterprise Finance Guarantee, set up to help small businesses cope the recession.

I'm intrigued to find out whether you have attempted to access finance through the scheme and succeeded. Recent research by the Forum of Private Business suggested that many entrepreneurs are actually avoiding the scheme because of a perception that bank managers don't understand it.

Post your thoughts and experiences below.

Vending Siting Services · Mar 23, 2009

Hello Dan

Thanks for posting this. I too would be interested to hear if anyone has been successful in raising funds through the scheme.

Regards.

Barbara

studentgems · Mar 24, 2009

Yes, me too.

I'd also like to know if anyone has received any funding through The Aspire Fund - a government backed investment fund launched last year.

Sorry if that's off-topic Dan...

Brisheff · Mar 27, 2009

Hi Dan,

My thought is new enterprises will be very lucky if they get a penny out of the scheme without there being some catch to it! e.g; The money has to be spent on what the government says, not what the enterprise owners want to spend it on.

It'll be nice to see what other members have to say.

Yours sincerely,
Brisheff

DuaneJackson · Jun 21, 2009

DanMartin said:
Recent research by the Forum of Private Business suggested that many entrepreneurs are actually avoiding the scheme because of a perception that bank managers don't understand it.

It's not the entrepreneurs that avoid it, it's the bank managers that will steer you away from it.

It was the same with the SFLG scheme. Banks saw it as too much paperwork and too much new info to absorb so they would steer you away from it. I think it takes a good year or two for these schemes to gain acceptance by the banks and for them to actively help entrepreneurs to benefit from them.

Unless the banks are incentivised to get these schemes widely used, it'll stay this way.

maxine · Jun 21, 2009

We tried and met with a bank who didn't even open their notebook and just basically told us to go away as they were only lending money under their usual criteria so it would be interesting to see anyone actually successful in their applications

thecolorfulco · Feb 9, 2011

Try these. Great for searching for grants, awars and loans in your area.

http://www.j4bgrants.co.uk/

Clarkewoods · Feb 9, 2011

I will watch this thread with interest, My bank manager and I discussed the scheme a few weeks ago but not in any detail, although I will be hounding for it to go ahead should I not qualify under their normal criteria!

Philip Hoyle · Feb 9, 2011

A client of mine was forced to use it when he needed a loan to buy another business of £35k (goodwill only - block of fees!). His existing business had a 10 year excellent track record, profits rising every year, never needed an overdraft or loan previously. Bank wouldn't give an unsecured loan. Client agreed to a director's personal guarantee backed by his mortgage-free home. Bank still wouldn't give the loan without it being under the govt guarantee scheme, so he had no choice but to give in - ended up with personal guarantee AND paying thousands extra for the Govt scheme that was completely unnecessary. Needless to say, at first opportunity, he'll be moving to a different bank!

andygambles · Feb 9, 2011

Philip Hoyle said:
Needless to say, at first opportunity, he'll be moving to a different bank!

I would have tried different banks anyway. Banks are just like any other supplier. You do not have to only use one bank to borrow money. You can approach any bank you want and as many as you want.

When I took out a loan I haggled the arrangement fee away and the interest down by speaking to all the banks.

Somecamel · Feb 10, 2011

LOL- No chuffing way!! When I asked my Bank Manager about it, he didn't even know what it was!!

smd · Feb 14, 2011

Hi, we are a struggling Business and our Relations Manager at Barclays suggested this Scheme to us. They are appointing someone to come and visit it us and discuss further. I will keep you posted.

Background:
We have a Holding Company (asset worth £500,000) Trading company cashflow problem so want to borrow against the asset. We wanted to extend our overdraft from £10,000 to £40,000. We have a business plan in place. The division for the overdraft refused it.

Fingers crossed we get this Scheme.

jim_price · Jun 27, 2011

I work with a few clients who have applied some successfully others not so. The use of the scheme varies greatly between the banks, RBS seem to be the most open to it use. Two problems feature routinely, 1) the banks look to get too much in the way of personal guarantees (in some cases they want getting on for 100% of the loan to be covered by the value of a PG, which kind of defeats the object!), 2) the loans are priced to high, maybe 4-6 points above base before the fees payable to BIS.

I do believe it can play a useful role for the right credit proposal.

businessfunding · Jun 27, 2011

smd said:
Hi, we are a struggling Business and our Relations Manager at Barclays suggested this Scheme to us. They are appointing someone to come and visit it us and discuss further. I will keep you posted.

Background:
We have a Holding Company (asset worth £500,000) Trading company cashflow problem so want to borrow against the asset. We wanted to extend our overdraft from £10,000 to £40,000. We have a business plan in place. The division for the overdraft refused it.

Fingers crossed we get this Scheme.

Just a though, but if you have assets - whether fixed (equipment/property) or current (book debts), then EFG is probably not your best route for funding.

The fundamental problem with the scheme is that the Government made a commitment on the banks' behalf that the banks never wanted to keep; in particular the use of term loans for short-term cashflow problems (which was the original target of the scheme). There is still bank funding out there for viable business, but you do have to work for it!

Admor · Jun 27, 2011

smd said:
Hi, we are a struggling Business and our Relations Manager at Barclays suggested this Scheme to us. They are appointing someone to come and visit it us and discuss further. I will keep you posted.

Background:
We have a Holding Company (asset worth £500,000) Trading company cashflow problem so want to borrow against the asset. We wanted to extend our overdraft from £10,000 to £40,000. We have a business plan in place. The division for the overdraft refused it.

Fingers crossed we get this Scheme.

Your Bank should only consider you for the EFG Scheme if you have no tangible security to offer. I assume your £500k asset is unencumbered (no debt against it), so why the EFG? Or is it not a property asset?

Although the asset is not in the same company where you want to borrow, you can get around this by either:

borrowing in the Trading Co name or
borrowing in the Holding Co name and they then lend on to the Trading Co.

For the Bank to use the asset as security they would take Cross Guarantees from both companies, supported by Debentures over both and a legal charge over the property(?) in the Holding Co i.e. no need for the EFG Scheme at a level of debt £40k max to an asset worth £500k.

Maybe I am missing something here?

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Have you received money through the government's Enterprise Finance Guarantee scheme?

DanMartin

Vending Siting Services

studentgems

Brisheff

DuaneJackson

maxine

thecolorfulco

Clarkewoods

Philip Hoyle

andygambles

Somecamel

smd

jim_price

businessfunding

Admor

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