The Small Firms Loan Guarantee Scheme

The Small Firms Loan Guarantee Scheme (SFLGS) is a joint venture operated by the Small Business Service (SBS) and a consortium of lenders including the high street banks. It is available to small businesses that have a viable business plan but who have been unable to raise a conventional loan. This may be because of a lack of security or business track record, or both.

Under the scheme the Government provides a guarantee to the participating funder against default by the borrower. The amount of this guarantee is 70% of the loan, although for businesses that have been trading for more than two years this increases to 85%. This therefore mitigates substantially the risk that the funder is taking in granting the loan.

The minimum amount of loan that can be considered is £5,000 and for a new start business the maximum is £100,000. For established businesses that have been trading for at least two years the maximum amount available rises to £250,000. Guarantees are available to cover loans repayable between two and ten years.