banking liaison group

small firm loan guarantee scheme


SFLGS - proposed changes

The Government has accepted the implementation of the Teresa Graham's review.

Key recommendations include:

  • Expanding the SFLGS lending limits to £250,000 per business for all eligible businesses
  • Raising the turnover limit to £5.6m for all eligible businesses
  • Reducing bureaucracy, including giving banks more control over the scheme, avoiding the need for Whitehall approval each time. But some accountants fear some bank managers may use this for doubtful loans
  • Better targeting of small firm loans at start ups and young businesses by introducing a maximum age limit for eligibility of three years’ trading activity, and reserving a segment of SFLGS funding for lenders with a clear focus on high-growth businesses
  • Encouraging new lenders to join the scheme
  • Allowing successful serial entrepreneurs to benefit by removing the current £250,000 limit on lending to any individual
  • Procedures which allow lenders who use the scheme most to have a larger share of a new overall annual limit.

Are the changes to the small firm loan scheme good?

Since the scheme’s launch in 1981, around 92,000 loans to over 88,000 businesses have been guaranteed, worth approximately £3.8 billion in total. Changes to the eligibility criteria made in April 2003 have led to an increase in the use of the scheme of more than 50 per cent. More than 6,000 loans have been guaranteed since April 2003 with a value in excess of £400 million, and the average loan size has now risen to around £69,000.

Our small business expert in south east England writes, Ever since the scheme started I never knew Whitehall had any interest in doing a due diligence exercise case by case, and certainly I bet they have never looked deeply enough re laundering. They rely on the banks to do that and penalise them if they get it wrong.

You can contact us for help with obtaining a small firm loan.


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