efg loan default

[jaypum]

Hello, i am a company director and have entered into voluntary liquidation due to a lost court case with a large building contractor. Myself and business partner signed an efg loan gaurantee for 120k approx 18 months ago, my ip and accountant have assured us that we are only liable under the scheme for 25% of the loan, however our bank manager told us today that we are liable fro the whole amount, we signed gaurantees last year for 120k each? (which in hind site was mad) but we assumed that the government would cover the first 75% and us the raminder split equally? Can anybody let me know what the outcome of this would be?
Thanks

 

[QuickHomeBuyers]

My understanding is

a. EFG in itself means the amount is backed by Govt guarantee.
b. Banks usually take PG for 25% of the amount lent. So your liablity is only 25%of the total amount borrowed.

 

[Williams lester]

My understanding is

a. EFG in itself means the amount is backed by Govt guarantee.
b. Banks usually take PG for 25% of the amount lent. So your liablity is only 25%of the total amount borrowed.

That's not normally how it works. The bank will seek to recover the full sum from the borrower...and if there is any shortfall after this then they can be reimbursed by the government for a set percentage of the loan.

 

[Scrutineer]

Just came across this thread. My company got into similar difficulties with our main client going bust on us in early 2010 and my company had to cease trading. Slightly less exposure of £40K, but ultimately the same problem.

I have to say that the "Government covering 75%" aspect was overplayed when I took out the loan for my company as it now look like the 1.5% insurance premium we paid for the priviledge of this 75% cover is not going to do anything for us.

I accept what you guys had to say about the principles of the EFG loan, and should have maybe taken a harder decision when presented with the PG back in 2009. But I didn't forsee the collapse of a key debtor at the time, and the knock-on effect it has had.

My question is really regarding whether there are any examples out there of lenders actually calling-in the goverment guarantee, and under what circumstances they decided to back-off chasing the borrower personally.

How far are the lenders going in pursuit of their PG's, and when do they call it a day and call on the 75% guarantee from the government.

Any anecdotal information appreciated.

 

[Jaydee]

My experience of this (from clients that have suffered similarly) is that the banks will defnitely call in the PG. Clearly, they want to recover 100% of the loan rather than the 75% Government guaranteed element.

There is also a clause in the Government guarantee paperwork that states that the guarantee is only valid once the bank has exhausted all other collection possibilities.

So, in your case, it really depends upon what assets you have to support your PG.

The banks are not in the business of making people homeless however, and providing that you can demonstrate that you can service the loan, they will continue taking monthly payments from you at the rate that your former-company were paying (and also at the same interest rate).

If you convert the company's loan into a personal loan, you will not have to continue paying the 1.5% insurance premium.

Of course, if you have no assets and are unable personally to meet the payments, then the bank can demonstrate that they have indeed exhausted collection possibilities and move on to the Government.

I have not had any instances that got this far, so no idea whether they would go legal before they moved on though.

 

[Scrutineer]

Thanks jaydee.

I'm currently treating the EFG loan as one of several creditors and paying them a much lower pro-rata amount (informal arrangement amongst several debtors at the moment).

They are getting nowhere near the actual amount required each month but have agreed to hold-off, but expect full payment within 6 months.

In a way, I'm thinking my partial offer has complicated matters. I had to make an equitable offer to all creditors, and the bank needs to be seen to be supportive and consider my payment offer.

Consequently the bank isn't able to say it's been "exhaustive" in it's pursuit, and equally I can't benefit from the government 75% cover as the bank can't make a claim unless I truly default.

Messy. It seems like it could drag on for ever.

Seems to be early days yet for EFG defaults so hopefully this thread will grow a little over time.

 

[saxondale]

Just came across this thread. My company got into similar difficulties with our main client going bust on us in early 2010 and my company had to cease trading. Slightly less exposure of £40K, but ultimately the same problem.

I have to say that the "Government covering 75%" aspect was overplayed when I took out the loan for my company as it now look like the 1.5% insurance premium we paid for the priviledge of this 75% cover is not going to do anything for us.

I accept what you guys had to say about the principles of the EFG loan, and should have maybe taken a harder decision when presented with the PG back in 2009. But I didn't forsee the collapse of a key debtor at the time, and the knock-on effect it has had.

My question is really regarding whether there are any examples out there of lenders actually calling-in the goverment guarantee, and under what circumstances they decided to back-off chasing the borrower personally.

How far are the lenders going in pursuit of their PG's, and when do they call it a day and call on the 75% guarantee from the government.

Any anecdotal information appreciated.

it was explained to me when the bank insisted we took 3rd party legal advice for the pg, IIRC the 75% relates to the first 30% of lending the bank made, a fraction of the actual loans and nothing to do with the indiviual loans to individual companies.



thats not how it was sold to the public mind

 

[jaypum]

just an update for you, we liquidated the company owing nothing on the overdraft, and 42k on the efg, the bank contiued taking the efg loan amiunt out for the past 7 months and have now only just contacted me regarding the debt, i didnt know this as all correspondence has been redirected to the ip, my ip informed me to play ball with the bank as much as possible but they should not have taken any more payments out as we were in liquidation proceedings? it now stands that with interest we are 19k overdrwan on the overdraft and owe 22k on the efg, seems the same 42k?, but the debt recovery team rang me and said they want full payment of the 19k now or they are going to persue my house through the courts, they stated that they could not come after my house for the efg but they can for the overdraft? i have heard rumours that they will except a settlement lump sum figure? does anyone know of any sttlemets being made to clear a pg? and can they persue my house even though i wasnt overdrawn when the company folded?

 

[Alan R Price]

just an update for you, we liquidated the company owing nothing on the overdraft, and 42k on the efg, the bank contiued taking the efg loan amiunt out for the past 7 months and have now only just contacted me regarding the debt, i didnt know this as all correspondence has been redirected to the ip, my ip informed me to play ball with the bank as much as possible but they should not have taken any more payments out as we were in liquidation proceedings? it now stands that with interest we are 19k overdrwan on the overdraft and owe 22k on the efg, seems the same 42k?, but the debt recovery team rang me and said they want full payment of the 19k now or they are going to persue my house through the courts, they stated that they could not come after my house for the efg but they can for the overdraft? i have heard rumours that they will except a settlement lump sum figure? does anyone know of any sttlemets being made to clear a pg? and can they persue my house even though i wasnt overdrawn when the company folded?

Banks do not like making people homeless because it makes for bad publicity. They will most likely want to do a deal but the size of that deal depends on the size of their expectations. If you have lots of equity in the property they will expect more than if there is none.

First I suggest you take advice about the enforceability of the PG. If the Bank misled you about the amount you would be liable for it could have problems trying to make you pay up. I am also extremely surprised by the story about them apparently artificially running up an overdraft to massage the figures so they could claim more under the PG.

There is a solicitor who posts here called Clare Kaudeur who is experienced in banking enforcement matters and I suggest you have a word with her. She may be able to save you a lot of money.

Once you have established how enforceable the PG is, you can then think about making an offer of settlement. I have known banks write off very large amounts where their expectations are low.

 

[jaypum]

They rang me 2 weeks ago and suggested i pay 16k settlement, i managed to raise 8K and offered that, they then passed me onto the 3rd person in the "TEAM" and she now tells me they want £38k? going nowhere with them at the moment? how do i get in contact with Clare Kaudeur for some advice?

 

[Alan R Price]

Clare's firm is Clarkmans - http://www.clarkmans.co.uk

 

[avantime]

Since my company failed in August I have had the bank approach me for the PG'd loan. I have told them I don't have it and they have said they will hand it to a debt collection company. I did have a good chat with a manager from the bank who said that he knows I didn't borrow the money with the intention of the business failing. He also said that the bank would not persue my house.

I am still waiting to hear from this company.

Reading through the loan agreement it confirms the bank cannot take a charge on a principle property. I realise they can still take me to court but would hope that this clause would be taken into account by a judge.

I have offered to pay them on a prorata basis (along with my other unsecured creditors) from my disposable income now that I am an employee. As it will take many many years to repay hopefully they will go to the Dti for the money.

Since the business closed I have got a dream job in an art studio and love it. Far less stress and things are and DO get better. If you are in a bad situation then remember this. My stress levels are well down and I have re-discovered my family. Chin up!
Good luck to the others in a similar situation.

 

[Anglia Finance]

Definitely legal advice required to see strength of the PG, was this signed with independent legal advice or witnessed by the bank manager?

The question of guarantees and EFG have come up with me many times. When the scheme was called SFLGS the banks were only able to take a PG to cover the 25%, however when the scheme changed a couple of years ago to EFG it enabled them to take a PG for the whole amount of the loan should they wish to.

 

[berrywoods]

we're going to be in much the same position later on in the year, we've just had a large chain store open 5 minutes down the road, we borrowed 20k through the efg scheme and 10k of our own money, im worried as to what the banks going to do if we have to close down the company.

 

[berrywoods]

interesting read i shall have to keep people updated on my case.

i borrowed 20k from an efg loan through barclays and 10k through a mix of family and personal loans though the family.

i have just booked an appointment with my local business manager to see what i can sort out.

ive paid £2,000 of the £20,000 and £1000 of the £10,000

my angle will be that i cannot afford to even pay a penny back in my current situation. Our business closed for a number of reasons (mainly just running out of money and a few risks not paying off) but also personally being on a verge of going broke, racking up lots of fee's every month making personal circumstances even worse, and now i have to take on the £10,000 loan personally which will be a huge struggle, ive had to let out one of my rooms to make ends meet.

I intend to tell him at current i cannot afford to pay anything back, they can either wait until circumstances change, i can find a job or i come into some money (unlikely) or they can write it off (again unlikely) i rent so my house cant be taken and my personal assets probably barely reach £1000, i was very carefull when i saw things going sour, so when we bought a new van on the creditcard it went in my partners name.

Ill let people know how this all pans out.

 

[Anglia Finance]

Please do keep us informed. Interestingly I have had half a dozen calls over the last few weeks asking advice on EFG loans on the back of this forum, I feel this subject will be increasingly discussed.

 

[gappy]

We are in a similar position, as our company has gone into liquidation and all 4 directors signed personal guarantees.
The bank are pushing all four of us for the full amount outstanding which is 82k.
The advice we have been given, is the bank will pursue each and everyone of us for the full amount, so if 2 of the directors go into iva's the bank have made it clear they will then pursue the other 2 for the full amount.
Unfortunately 2 directors are husband and wife and the bank are pursuing them individually, even though they are not able to make any payments at present the bank are pushing hard for their money.
The EFG loan and the so called 75% is definitely being missed sold, as we were clearly led to believe they would call this in on default and we would only be liable for the 25% of the loan.
This is despite being warned by solicitors of the strength of the PG, however, we all signed believing the bank would call on the DTI guarantee first. If they done this and came to us for the 25% they would recover the full amount of the loan, but they are not interested ingoing this route.

 

[Alan R Price]

gappy

Given the amounts involved I suggest taking specialist legal advice. You will have to pay for it but if you have been misled you may be able to get off all or at least part of the debt.

I suggested to a previous poster contacting Clare Kaudeur of Clakmans solicitors - http://www.clarkmans-solicitors.co.uk/ - and I reiterate that now.

 

[gappy]

Thank you i will contact them. I have asked the bank for copies of the loan agreement and the PG, so i can go through in detail.

Thanks.

 

[tikimarsh]

My sister and I entered into a £120k EFG loan with a £28k PPI attached insurance. With the business flagging, we're in a very difficult spot. My sister is about to sell her house, meaning she has no equity available. I have my house with £40k in it. The bank manager said "we won't take your house as the PR would be bad and you have children". My question is this: if we go into insolvency and then buy the business back out of insolvency, minus the debts, might that make the bank more inclined to pursue us? We've got fairly high personal debts through supporting the business over the recession. I know these are similar questions to the above but we are in real trouble and don't seem to be able to sleep.

 

[Alan R Price]

My sister and I entered into a £120k EFG loan with a £28k PPI attached insurance. With the business flagging, we're in a very difficult spot. My sister is about to sell her house, meaning she has no equity available. I have my house with £40k in it. The bank manager said "we won't take your house as the PR would be bad and you have children". My question is this: if we go into insolvency and then buy the business back out of insolvency, minus the debts, might that make the bank more inclined to pursue us? We've got fairly high personal debts through supporting the business over the recession. I know these are similar questions to the above but we are in real trouble and don't seem to be able to sleep.

I think you might find it hard to convince a court that the bank manager said what he said. On the face of it you have signed legally binding documentation, presumably after being independently advised? The banks' internal procedures provide for this. Have you signed a personal guarantee? The first thing to do is obtain a proper legal opinion about the validity of any documentation you signed and the representations apparently made by the manager.

You should also take specialist advice about the company's current financial situation because there may be more than one option available to you.

 

[inaspot]

What a find this site has been. I am supporting my friends (x2) through their trying time of their paving business going into liquidation. They took a £35k loan through EFG.

They sold their home to reinvest into the business and other than the clothes on their back they have nothing. They now live at home with their parents and they have nothing........

...their question is. will they have to declare personal bankrupcy before the lender will back off. Does it have to go that far.

They are in for £20k of the outstanding loan.

 

[Truemanbrown]

The thing that you need to know is whether the Personal Guarantee was legally made? If not, then you may not legally owe the money.

If the banks have been inept in putting the right paperwork in place, then you will need to investigate it.

There are professionals who now deal with this subject matter specifically. I would advise you to obtain some advice off one of these individuals.

 

[avantime]

I think you might find it hard to convince a court that the bank manager said what he said. On the face of it you have signed legally binding documentation, presumably after being independently advised? The banks' internal procedures provide for this. Have you signed a personal guarantee? The first thing to do is obtain a proper legal opinion about the validity of any documentation you signed and the representations apparently made by the manager.

You should also take specialist advice about the company's current financial situation because there may be more than one option available to you.

I agree with the taking of legal advice. On the matter of not taking the house the bank cannot take a charge on a principle property under the EFG scheme.

 

[avantime]

What a find this site has been. I am supporting my friends (x2) through their trying time of their paving business going into liquidation. They took a £35k loan through EFG.

They sold their home to reinvest into the business and other than the clothes on their back they have nothing. They now live at home with their parents and they have nothing........

...their question is. will they have to declare personal bankrupcy before the lender will back off. Does it have to go that far.

They are in for £20k of the outstanding loan.

The bank will probably put the debt out to a debt management company. My bank did and I am currently paying "what I can reasonably afford" - this is all they can fairly expect me to pay. Currently it's not much at all.

Interestingly my ex-business partner has recently taken out a personal loan so the EFG loan default has not shown on his credit record!? Probably because the loan was for our Ltd company. If this is the case with your friends (are they Ltd?) then it may be better for them NOT to go down the personal bankcrupcy route.

 

[Alan_Math]

Came on here looking for some reassurance, but now I'm totally depressed.

Here is my story:

I took a £20k EFG loan out in 2009, we'd paid off roughly half of the amount when a builder went bust on us forcing the company into liquidation through not being able to pay it's debts when the fell due.

So I got my letter in from the bank calling in the debt, I phoned a fella' at the bank and we discussed the EFG, we agreed that the bank would call in the £9500 from the Government and I'd pay the remainder up over the next 12 months, I fired off the paperwork to the bank and heard nothing since.

Until...... I got home from work yesterday and had a letter from a recovery agency (Regal), so I phoned the bank and they said they had no record of my previous conversations with the bank and had not seen my proposals and that I am NOW dues to pay the full amount.

HELP!! :-/

 

[Tom McClelland]

It is a requirement of the EFG from the government's point of view that the bank must exhaust attempts to get you to pay up for it *before* any part of the government's 75% comes into play. If the bank can't show that they've pursued you ruthlessly they don't get their government guarantee. Also they're limited to reclaiming 9% of their entire EFG portfolio which gives them another motive for reclaiming as much as possible from individual borrowers.

In fact you render yourself ineligible for an EFG loan in the first place if you aren't prepared to put all of your personal assets at stake. This ought to been explained to you carefully when you took the loan out.

But it is also a condition of EFG loans that lenders aren't allowed to take a charge on main residence of guarantors. (though in practice I'm not sure how serious that limitation is, since guarantors are expected to stake all of their possessions to get the loan. Not "taking a charge" isn't the same thing as saying that your home definitely isn't at stake).

 

[Alan_Math]

I understand that Tom, but for the bank to agree verbally over the phone that they'd pursue the Government for the amount, then for them to deny the conversation took place is what is annoying me.

 

[Alan R Price]

I understand that Tom, but for the bank to agree verbally over the phone that they'd pursue the Government for the amount, then for them to deny the conversation took place is what is annoying me.

Anecdotal evidence is that many bankers and intermediaries did not (and still don't) really understand how EFG loans worked. The 75% guarantee by the government is only in respect of any shortfall after the bank has exhausted all its other avenues of collection. This is actually usually pretty plainly stated in the documentation however most people have either not read it or it has not been explained to them adequately.

So what should happen is that the bank looks first to the company and the guarantors (jointly and severally) before making any claim to the government.

Whether you have any way of avoiding your guarantee obligation is open to question. If the bank incorrectly advised you or misled you about the extent of your liability at the outset is a question of fact and if it came to a fight in court you would have to convince the judge of the facts. Your position could be made harder if the guarantee liability is clearly set out in the documentation you signed although there are certain safeguards built into the process about you being given the opportunity to seek legal advice on the effect of the guarantee etc. before signing up.

My advice is to get a view from a specialist solicitor - it could save you a lot of money. There are two who post here who deal with this type of situation: Clare Kaudeur and Marie-Claire Hoare.

 

[berrywoods]

Hi All, thought id update everyone as things with this for me have only now reached new levels.

A while back (Early December) the bank contacted me asking me to pay the outstanding £18,000. It took me nearly a month to get in contact with them, everytime i rang no one was there, in the mean time i was being told unless i tried to sort things out and an agreement id be taken to court, only today have i finally been able to speak to someone.

He told me that the 75% doesnt cover me if i default, (as mentioned in above posts) it covers the bank for shortfall. They are calling me £14,000 of the £18,000 loan.

Now when my business closed and i was well enough to work again (back last november) i could only get a job that paid £650 a month working for sainsburys stacking shelves. Out of that £650, im left with nothing.

that purely covers bills and basic living expenses. Out of that £650, £126 of it, pays a loan, which a family member took out in her name for me to start my business.

The bank have said i must pay them pro rota, ie pay them half of the £126, offer the other half for the other loan.

I cant do this, This loan was taken out by my nan, i didnt nor did she expect my business to fail and i cannot afford to make up the short fall on her loan.

The bank also pushed me to approach family for £14,000... who in the right mind would hand me £14,000 ? this i found quite upsetting, they said this was the "best" option and the least stressfull for me.

If i dont act or agree to pay half of £126 a month by Monday next week, they are going to instruct their solicitors to take me to court to take a ccj out on me.

Im competely lost with what to do. I was quite prepared to pay off 25% (what i believed they would agree on) and pay small amounts from that, up until i can find better paid work. With the stress of this i cant face looking for more work, not if it means any extra i earn has to go torwards this... not that theres much work out there at the moment

something i thought may be worth mentioning. I still have the orginal documents i signed for this loan. I was reading through yesterday and noticed that on the contract it says my first payment would be made in March 2010, well my first payment was actually made (or rather taken by them) in November, Does this count as breaking contract? is this worth pursing with a solicitor?

if anyone can help or advice that would be great

 

[Alan R Price]

Hi All, thought id update everyone as things with this for me have only now reached new levels.

A while back (Early December) the bank contacted me asking me to pay the outstanding £18,000. It took me nearly a month to get in contact with them, everytime i rang no one was there, in the mean time i was being told unless i tried to sort things out and an agreement id be taken to court, only today have i finally been able to speak to someone.

He told me that the 75% doesnt cover me if i default, (as mentioned in above posts) it covers the bank for shortfall. They are calling me £14,000 of the £18,000 loan.

Now when my business closed and i was well enough to work again (back last november) i could only get a job that paid £650 a month working for sainsburys stacking shelves. Out of that £650, im left with nothing.

that purely covers bills and basic living expenses. Out of that £650, £126 of it, pays a loan, which a family member took out in her name for me to start my business.

The bank have said i must pay them pro rota, ie pay them half of the £126, offer the other half for the other loan.

I cant do this, This loan was taken out by my nan, i didnt nor did she expect my business to fail and i cannot afford to make up the short fall on her loan.

The bank also pushed me to approach family for £14,000... who in the right mind would hand me £14,000 ? this i found quite upsetting, they said this was the "best" option and the least stressfull for me.

If i dont act or agree to pay half of £126 a month by Monday next week, they are going to instruct their solicitors to take me to court to take a ccj out on me.

Im competely lost with what to do. I was quite prepared to pay off 25% (what i believed they would agree on) and pay small amounts from that, up until i can find better paid work. With the stress of this i cant face looking for more work, not if it means any extra i earn has to go torwards this... not that theres much work out there at the moment

something i thought may be worth mentioning. I still have the orginal documents i signed for this loan. I was reading through yesterday and noticed that on the contract it says my first payment would be made in March 2010, well my first payment was actually made (or rather taken by them) in November, Does this count as breaking contract? is this worth pursing with a solicitor?

if anyone can help or advice that would be great

At the risk of sounding like a cracked record, you should take legal advice because if the bank misled you you may be able to avoid at least part of the liability.

 

[avantime]

Berrywoods.

Why are the bank asking you for £14000 of the £18000 due? I'd hve thought that they would be going for the full amount. Did they give it to you as a settlement figure if you got it from a member of your family?

The bank say they will take you to court - in the letter from them it will probably say MAY take you to court. They don't like doing it as it doesn't look good. In my case they farmed it out to a debt collection company and I am paying a nominal amount each month - ie what I can reasonably afford.

I'm currently arguing with the bank for various reasons and it has got to the stage to take it to the financial ombudsman. One of the reasons is the fact that all the bank managers who handled the loan from the application to the final default (3 managers in total!) spoke about the 75% being covered by the government - saying how it was the same as the previous scheme! I am amazed at the lack of product knowledge all this time after the introduction of the scheme.

Other than that Alan's advice is a good place to start.

Alan

Here is a link to a government site outlining the scheme. In the default section (Part 5) it talks about proceeds from the forced sale of a principle property. Does this mean that the bank can instigate bankcruptcy but not take proceeds from equity in it?!

 

[Tom McClelland]

The bank won't want to waste its money, so if you can convince them that you haven't got any money it is a waste of their time and money to take you to court.

Is the loan with your Nan a different loan, a separate issue? I expect that someone will have to keep paying that one or your Nan would be in trouble.

 

[Alan R Price]

Alan

Here is a link to a government site outlining the scheme. In the default section (Part 5) it talks about proceeds from the forced sale of a principle property. Does this mean that the bank can instigate bankcruptcy but not take proceeds from equity in it?!

Interesting quote from the BIS official guidance notes on EFGs:

"As EFG is intended to support loans to businesses that can ultimately repay the loan in full, EFG does provide [my italics] protection to the borrower in case of default. . ." This is clearly a misprint (it should say " does not . . ."), given the next sentence:

"Therefore, in the event that borrower defaults on the loan repayments, the lender is entitled to pursue the borrower for full repayment of the loan as they would a normal commercial loan."!

I had not spotted the exclusion of realisations from the principal residence before before but I think you are correct insofar as it might relate to direct security over a guarantor's house. The guarantor may have a prior debt to the bank which is secured over his house, in which case the bank could realise its security but it could not use any of that security to pay off the EFG.

If the guarantor were to go bankrupt, the trustee could realise his interest in the principal residence and would pay dividends to creditors pro-rata; so I do not believe this would exclude the bank from claiming in the bankruptcy, even if its main chance of getting paid relied on the trustee selling the house.

It does appear however that the guidance was written by a semi-literate, politically correct half-wit.

 

[avantime]

Thanks Alan

That misprint has been there for a long while. I wonder how many people it has influenced to take out the loan!



"semi-literate, politically correct half-wit." - could almost be written by a business manager!!!!

 

[twozuluzulu]

Hi to every one out there ,great thread
I have been reading with interest,so i thought i would let you know my story .
My company has just gone into liquidation due to the withdrawal of merchant services facillity [ironically former rbs now world pay].
My wife i and i took out two efg,s totaling £155k with £32k pg ,s the company had paid backed all but £40k.
We were also lead to believe that in the event of a default on the efg that only 25% of the outstanding amount would be called in by the banks,the other 75 from the gov.
I have just had a letter asking for £32K within 7 days or a payment proposal.
This does seem rather like thew ppi scandal.
Ok i know in hindsight i should have taken legal advice ,but it does seem to me that bank managers are not putting the efg proposal to their clients in a clear and precise way.
I have taken note of the legal teams already mentioned on this site and will contact them tommorrow.I wonder if therE could be some type of class action for miss selling as our numbers are starting to grow.
will let you know the outcome.
looking forward ,as one door closes another will surely open.stay positive
REGARDS. TZZ

 

[djprescott]

I have just registered on the site and have been reading this thread with interest as I have an EFG in place for my business and my business partner has just passed away.
Can anyone tell me what is the point of the insurance? It appears that a claim could never be made against the loan so I do not see the purpose of the insurance.

Regs Dave

 

[Anglia Finance]

I have just registered on the site and have been reading this thread with interest as I have an EFG in place for my business and my business partner has just passed away.
Can anyone tell me what is the point of the insurance? It appears that a claim could never be made against the loan so I do not see the purpose of the insurance.

Regs Dave

What insurance do you mean? There is no a set policy that links to an EFG scheme so if the bank sold you life cover then you'll need to review that policy.

If you are referring to the fact the loan is also secured by Government this is certainly not an insurance policy but assistance in getting a loan agreed where the only reason the bank won't lend is lack of available security.

 

[djprescott]

What insurance do you mean? There is no a set policy that links to an EFG scheme so if the bank sold you life cover then you'll need to review that policy.

If you are referring to the fact the loan is also secured by Government this is certainly not an insurance policy but assistance in getting a loan agreed where the only reason the bank won't lend is lack of available security.

Hi, I was referring to the Government Guarantee, reading replies on the thread, it appears the the Guarantee would never be brought into use I wonder what purpose it serves or have I missed something?

Dave

 

[Tom McClelland]

Hi, I was referring to the Government Guarantee, reading replies on the thread, it appears the the Guarantee would never be brought into use I wonder what purpose it serves or have I missed something?

Dave

The guarantee *is* brought into use, but it is the bank's guarantee, not the borrowers. The bank is only allowed to go for that guarantee if they can show that they've ruthlessly pursued the borrower for the money first, and come back empty-handed.