- Home
- Home Based Business
- Small Business
- Wake-up Call to Small UK Businesses: SFLG is here
Wake-up Call to Small UK Businesses: SFLG is here
- By Charlie S Lafave
- Published 29 September 2008
- Small Business
- Unrated
The Small Firms Loan Guarantee (SFLG)scheme is deemed an attractive
form of finance for business clients by a majority of UK accountants
according to an independent study.
Yet despite the excited buzz surrounding the scheme, in a survey of small businesses, none had clients who were using the scheme.
The SFLG provides up to £250,000 for companies with minimal business assets or those who lack security, making it presents an excellent financial resource for many businesses.
In April, the Government has majorly overhauled the rules regarding the SFLG Scheme. The previous 5-year rule is no longer applies to new loan applications. Thus more businesses can avail of the scheme. The Chancellor also announced a 60% increase in SFLG funding available.
Despite these positive changes, a huge number of UK business are ignorant about the scheme. More than a third (36 per cent) of the accountants surveyed by Venture Finance did not know about the scheme or how it could be beneficial to their clients. This means that there is still a lot to do in terms of raising public awareness about the SFLG scheme.
While 17 per cent of the accountants reviewed currently recommend the scheme
and it would be
great to see this figure grow. The scheme presents a real opportunity
for accountants to play an important role in providing objective
guidance on funding options.
For those who are clueless about SFLG, it is a scheme meant for funding feasible business plans of small to medium-sized enterprises (SMEs), who require a loan but are finding it difficult to obtain one due to their inability to furnish assets as security. The scheme provides lenders with a government guarantee against default in certain circumstances.
SFLG is a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and a number of participating lenders. Participating lenders administer the eligibility criteria and make all commercial decisions concerning the loans.
The main features of the scheme are:
Yet despite the excited buzz surrounding the scheme, in a survey of small businesses, none had clients who were using the scheme.
The SFLG provides up to £250,000 for companies with minimal business assets or those who lack security, making it presents an excellent financial resource for many businesses.
In April, the Government has majorly overhauled the rules regarding the SFLG Scheme. The previous 5-year rule is no longer applies to new loan applications. Thus more businesses can avail of the scheme. The Chancellor also announced a 60% increase in SFLG funding available.
Despite these positive changes, a huge number of UK business are ignorant about the scheme. More than a third (36 per cent) of the accountants surveyed by Venture Finance did not know about the scheme or how it could be beneficial to their clients. This means that there is still a lot to do in terms of raising public awareness about the SFLG scheme.
While 17 per cent of the accountants reviewed currently recommend the scheme
For those who are clueless about SFLG, it is a scheme meant for funding feasible business plans of small to medium-sized enterprises (SMEs), who require a loan but are finding it difficult to obtain one due to their inability to furnish assets as security. The scheme provides lenders with a government guarantee against default in certain circumstances.
SFLG is a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and a number of participating lenders. Participating lenders administer the eligibility criteria and make all commercial decisions concerning the loans.
The main features of the scheme are:
- A guarantee to the lender covering 75 per cent of the loan amount, for which the borrower pays a two per cent premium on the outstanding balance of the loan.
- The ability to guarantee loans up to £250,000 for a period between two and ten years.
- Availability to UK businesses with an annual turnover of up to £5.6 million.
- Available to businesses in most sectors and for most business purposes, although there are some restrictions.
