This Content Was Last Updated on April 4, 2020 by Jessica Garbett


Facilitating lending to the UK’s smaller businesses.

Since its launch in 2009, the British Business Bank’s Enterprise Finance Guarantee (EFG) has supported the provision of £2.7bn of finance to more than 26,000 smaller businesses in the UK (as at October 2016).

EFG facilitates lending to smaller businesses that are viable but unable to obtain finance from their lender due to having insufficient security to meet the lender’s normal security requirements.

In this situation, EFG provides the lender with a government-backed 75% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

EFG is managed by British Business Financial Services Limited on behalf of its sponsoring department, Department for Business, Energy and Industrial Strategy (BEIS).

How does EFG work?

The British Business Bank has launched a new video which explains how EFG works and outlines why this is such an important option for smaller businesses that need finance in order to grow.

Working with business advisers and practitioners

The British Business Bank is partnering with stakeholders such as ACCA to raise awareness of EFG, with the aim of helping smaller businesses that may have inadequate security to meet a lender’s normal requirements but have a robust business plan and a sound borrowing proposal.

Raising awareness through advisers and Member Practitioners will help to ensure viable businesses know to enquire if they are eligible for an EFG-backed facility and how to apply.

EFG: The facts

EFG supports a wide range of business finance products, including:

  • Term loans
  • Revolving facilities, such as overdrafts
  • Invoice finance facilities
  • Asset finance facilities.

To be eligible for support via EFG, the small business must:

  • be UK based, with turnover of no more than £41 million per annum
  • operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support)
  • have a sound borrowing proposal and robust business plan, but inadequate security to meet a lender’s normal requirements
  • be able to confirm that they have not received other public support or state aid beyond euro 200,000 equivalent over the previous three years

EFG guarantees loans to fund the future growth or expansion of a business, from £1,000 to £1.2 million.

Finance terms are from three months up to 10 years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

Note: A limited number of further eligibility restrictions apply.

How does a small business apply for an EFG-supported borrowing facility?

It’s simple to apply and should take no longer than a standard loan application.

Any small business interested in EFG should, in the first instance, approach one of the 40+ EFG accredited lenders with their borrowing proposal.

If the EFG lender can offer finance on normal commercial terms without the need to make use of EFG, they will do so. Where the small business has a sound borrowing proposal but has no (or inadequate) security, the lender will consider the small business for support via EFG.

Decision-making on whether a small business is eligible for EFG is fully delegated to the 40+ accredited EFG lenders. These lenders range from high-street banks, to challenger banks, to asset based lenders, through to smaller specialist local lenders.

Full details on EFG eligibility criteria and a list of participating EFG lenders

Please note:

  • As with any other commercial transaction, the borrower is always responsible for repayment of the full value of any facility supported by EFG
  • The EFG guarantee is to the lender and not the small business
  • All small businesses supported via EFG are required to pay a 2% annual fee to the government, as a contribution towards the cost of the scheme
  • This fee is payable on a quarterly basis and is collected by direct debit, directly from the small business’s bank account

The British Business Bank

The British Business Bank is a government-owned business development bank which aims to ensure that finance markets work effectively for smaller businesses, enabling them to grow, prosper and build UK economic activity. Using research, expertise and government money, the British Business Bank designs and delivers programmes that benefit start-ups, high growth, or simply viable but underfunded smaller businesses.

The British Business Bank operates through a number of subsidiaries. Neither British Business Bank plc nor its wholly owned subsidiary, British Business Financial Services Limited, is authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). British Business Bank plc and its subsidiary entities are not banking institutions and do not operate as such.

Article from ACCA In Practice