EFG (Enterprise Finance Guarantee) £1m business loan.

Discussion in 'Accounts & Finance' started by m4ttch4tt, Nov 15, 2011.

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  1. m4ttch4tt

    m4ttch4tt UKBF Regular Free Member

    230 15
    Hello everybody.

    I've been a running project for the last 2 years which has lead me to the point of applying for a £1m business loan through the government backed EFG scheme. Myself and the growing company already meet the criteria set out and we need not discuss how difficult it can be to get funding through it.

    What has happened now though is that the EFG lenders would like a sum of money from myself to show 'Commitment' in the range of £15-£20k. Unfortunately I am only 23 years old and have never earned above £25k in my life so £15k of life savings is just out of the question as I haven't been working on this planet long enough, also moving into a new and first house in May has swallowed up every penny I have (Unfortunately rented accommodation so I cant even put it up or I would).

    What I would like to ask is how would any of you go about raising this relatively small amount of money as 'Commitment'. I have already had some suggestions from close friends and family in the form of approaching brand names which I will be selling or the delivery companies who may be interested in exclusive shipping rights.

    Any help is greatly appreciated as I feel like I'm stuck in a very deep hole at the moment... The only thing keeping it going is the thought that others have been in this exact same position before me and they succeeded which gives me the drive.

    Thank you.
    Posted: Nov 15, 2011 By: m4ttch4tt Member since: Nov 14, 2010
  2. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,699 2,435
    What is the loan for?
    If you don't get the loan what happens, can the company continue as it is and growing slower?
    Why do you expect the government to back you when you are unable to make any comitment to the company for such a large amount of capaital

    Most business owners would be required to place their home on the line as comitment for a £10,000 loan yet alone £1,000,000
    Posted: Nov 15, 2011 By: Chris Ashdown Member since: Dec 7, 2003
  3. m4ttch4tt

    m4ttch4tt UKBF Regular Free Member

    230 15
    The £1m loan is for complete start-up.

    - Website developement
    - Initial stock
    - on and offline Marketing
    - Further Patents
    - Initial employment boost etc

    'Why do you expect the government to back you when you are unable to make any comitment to the company for such a large amount of capaital'

    Quite simply because the output is far greater than the input.
    £1m is relatively small in comparison to forecast growth over 5 years based on 1, 1.5 & 1.75% scenarios so an investor would quickly see their return.

    £1m may seem a lot to get things up and running but everything always take twice as long and costs twice as much as you expect so a nice big cushion is required. For the first 16 weeks the loan actually pays itself back and from my own pocket I cannot afford £15kPM payments until sales start to pick up.

    'If you don't get the loan what happens, can the company continue as it is and growing slower?'

    It cannot grow slow very well. this business needs to just happen.
    BOOM! here we are come use us, hence the monetary backing requirement.

    It requires a lot of people, 10's of 1000's, to work effectivley made easier by the internet, you gotta love on-line marketing.
    that area has been covered by lowering prices on all mainstream electronic consumer products by up to 70% in most cases (and prices are getting better the more contacts I make.) getting customers to buy a bargain in the current economic climate should hopefully prove to be relatively simple than churning out the same prices as everyone else.

    I would put my house on the line but as I stated I rent at the moment because I'm poor.

    Thanks M.
    Last edited: Nov 15, 2011
    Posted: Nov 15, 2011 By: m4ttch4tt Member since: Nov 14, 2010
  4. Tom McClelland

    Tom McClelland UKBF Ace Full Member

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    No-one will give £1,000,000 loan to a 23 year old (or indeed a borrower of any age) with no track record and no security to offer against the loan (except maybe a rich fond relative). EFG has similar security requirements as other commercial loan.

    Sometimes the simple truth is the most useful thing to have. You need to find another way to develop your business idea.
    Posted: Nov 15, 2011 By: Tom McClelland Member since: Feb 10, 2008
  5. m4ttch4tt

    m4ttch4tt UKBF Regular Free Member

    230 15
    I appreciate the reply Tom but I think the words 'No-One' are a bit much.

    I am in the process of completing all the documentation for the EFG and just need to amend a few things in the BP. This post wasn't asking if anyone could help me with the EFG I've already done that bit.
    I meet the criteria, have been accepted and am approaching lenders as we speak.
    They just want to know that I am committed, which is effing bull-crap because I've been committed since day one starting two years back. they just like putting barriers in the way. I mean what kind of request is £15k security on £1m???
    Posted: Nov 15, 2011 By: m4ttch4tt Member since: Nov 14, 2010
  6. The Pines

    The Pines UKBF Newcomer Free Member

    322 95
    An unbelievably loose one, given the current lending climate.

    A £1m loan, and you are only expected to put down 1.5%??? Given that most other lending institutions are looking at a minimum 35%, you don't realise how lucky you are!

    So, how to get the £15k - Three F's - Family, Friends, Fools.

    Then credit cards, sell anything of value, ask parents if there is an inheritance due to you that you could take a bit earlier. Anything really - but stop moaning about having to put up 1.5%.
    Posted: Nov 15, 2011 By: The Pines Member since: Nov 20, 2008
  7. cmcp

    cmcp UKBF Newcomer Free Member

    3,337 856
    A very modest one.
    Posted: Nov 15, 2011 By: cmcp Member since: Jun 25, 2007
  8. Tom McClelland

    Tom McClelland UKBF Ace Full Member

    2,890 789
    It is so minuscule a request as to be irrelevant. My "suspicion" meter is jammed against the peg on 10. £250k would be more like it. Is this £15k by any chance an unrecoverable "fee" for attempting to arrange the loan for you?

    I stand by my previous statement. A startup idea from someone with no track record and no collateral has precisely zero chance of securing a million pound loan.

    But if you think that as soon as you've secured the £15k from somewhere you're going to get the £1M I see little point in arguing about it. I've said my piece.
    Posted: Nov 15, 2011 By: Tom McClelland Member since: Feb 10, 2008
  9. Guest

    0 0

    Isn't this a contradiction.

    Quite bluntly, I don't think for one second that you will qualify for an EFG - you are asking the taxpayer to put £750K behiond an unproven business?

    This is an equity, not a loan deal.
    Posted: Nov 16, 2011 By: Member since: Jan 1, 1970
  10. fathippy

    fathippy UKBF Enthusiast Free Member

    603 94
    Can I just echo something that Tom mentioned earlier in passing. I dont want to guess at anything, but from all the available information, this looks a little like a scam at worst or an aggressive intermediary at best.

    I suspect that you have been approached/approached an intermediary who has told you that you have been "accepted". This would tally with your comment that you are now "approaching lenders".

    Based on this assumption, I suspect that the 15k is some kind of non-refundable fee, described to you as a commitment that the lender wants to see, but in reality it is profit for the intermediary. This makes the whole picutre add up to me.

    I apologise if I have got this all wrong, but in my experience this is how it looks. Please take a step back and just make sure of everything before you liquidate the cards/assets/family and jump in.
    Posted: Nov 17, 2011 By: fathippy Member since: Jul 17, 2008
  11. Tom McClelland

    Tom McClelland UKBF Ace Full Member

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    You have identified exactly what I was thinking, but I was a bit too cowardly to say it as openly as that.
    Posted: Nov 17, 2011 By: Tom McClelland Member since: Feb 10, 2008
  12. Esk247

    Esk247 UKBF Legend Free Member

    7,758 1,514
    nor is it intended to facilitate lending to businesses which are not viable and that banks have declined to lend to on that basis.

    how can you prove viability? normally through access to credit with other companies, paid up loans, long trading history etc?

    EFG supports lending to viable businesses with an annual turnover of up to £25m

    you need some kind of annual turnover (trading history) for them to go on before applying for the loan

    EFG is used by lender when addressing the debt finance requirements of viable businesses which although they do not have sufficient security, can demonstrate to the lender that they have capacity to ultimately repay the loan in full.

    It's just debt financing for companies that are going through a tough time e.g. manufacturing but which have been successful in the past. I think, according to their website:

    Posted: Nov 17, 2011 By: Esk247 Member since: Oct 6, 2008
  13. DarrenTSO

    DarrenTSO UKBF Newcomer Free Member

    72 13
    Posted: Nov 17, 2011 By: DarrenTSO Member since: May 17, 2011
  14. Alan R Price

    Alan R Price UKBF Newcomer Free Member

    2,123 1,037
    Yep, it sounds like a scam to me.
    Posted: Nov 22, 2011 By: Alan R Price Member since: Jul 5, 2010
  15. bizloanservices

    bizloanservices UKBF Newcomer Full Member

    104 34
    To reiterate the advice - stay away. The process you have quoted is the wrong way round. You don't get 'accepted' by EFG - the banks review a request, approve it internally and then apply for an EFG.

    Someone may have looked at your business plan and advised you that you qualify but it's not an approval.

    However, as highlighted elsewhere, based on what you've shared I'd be extremely surprised that you'll get support with or without an EFG.

    Tread carefully and certainly do not part with any cash.
    Posted: Nov 23, 2011 By: bizloanservices Member since: May 25, 2010
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