British Business Bank’s Flagship Enterprise Finance Guarantee programme passes £3bn lending milestone to smaller businesses

Press release 02 November 2017

The British Business Banks’s Enterprise Finance Guarantee (EFG) programme has now supported smaller businesses with loans totalling more than £3 billion. The provision of over 28,300 business loans, at an average value of around £105,000, has allowed smaller businesses across the UK to grow and further their business ambitions.

EFG enables lenders to make loans of between £1,000 and £1.2 million for smaller businesses who would have been – or already have been – turned down for a loan or other form of debt finance because they are not able to provide sufficient security for the loan. Launched in January 2009, the programme provides its accredited lenders (currently more than forty) with a Government-backed guarantee for 75% of the loan value.

Building an economy that works for all is an important part of our Industrial Strategy, which is creating the conditions for businesses to start up and grow right across the country. Today’s £3 billion lending milestone shows just how much Government support is available to help ensure small businesses get the access to finance they need to succeed. Margot James Small Business Minister
In the UK, over 28,000 loans with a total value of over £3 billion have been made to smaller business in sectors as diverse as retail to construction, the arts to support services. The Enterprise Finance Guarantee is an important option for smaller businesses who need access to finance to grow, but struggle to meet the lender’s normal security requirements. £3 billion in lending is a major milestone for the programme, making a real difference to the many thousands of businesses it has supported. Reinald de Monchy British Business Bank, Managing Director, Wholesale
This milestone is testament to the fantastic work that the British Business Bank does right across the UK. The Bank facilitates vital access to finance for thousands of small firms, particularly in areas of the country where investment is harder to secure. The £3 billion of lending backed by the enterprise finance guarantee is a critical lifeline for our small business community – we urge lenders to embrace and promote the initiative. Mike Cherry Federation of Small Businesses (FSB) National Chairman

Amongst the smaller businesses that have used an EFG loan to expand and create new jobs and opportunities are Miss Macaroon, a high-end patisserie based in Birmingham, and Buckinghamshire Mazda Ltd., an Aylesbury-based car dealership trading as Lodge Garage.

  • Miss Macaroon is run as a social enterprise, with products being hand-made by young people who have experienced long-term unemployment, ex-offenders and care leavers aged between 18 and 35.

Rosie Ginday, Miss Macaroon’s Managing Director, was finding it difficult to secure finance from social and traditional lenders. In March 2016 Rosie successfully approached BCRS Business Loans, an accredited lender for the British Business Bank’s EFG programme. In November 2016, she opened her first store in Birmingham’s Great Western Arcade.

Without this loan, I wouldn’t have been able to progress with our plans to open brand new stores and create additional employment opportunities. Rosie Ginday
  • Buckinghamshire Mazda Ltd (Lodge Garage) has a strong new and used car sales business and provides servicing and body shop work. Having undertaken a detailed strategic review of the business model with the help of external consultants, Managing Director Floyd Timms identified a range of opportunities to grow the business, all of which would require further investment. These included new workshops, a new MOT bay, upgrades to signage, staff training and development, and a new reporting system to improve performance management.

In March 2017 Buckinghamshire Mazda secured a £200,000 EFG-backed loan via Lloyds Bank after a full review of its new business plan.

I could see the growth and opportunity that this suite of reforms offered to our business, but knew that we could not provide the security that the bank would require for the loan. The Enterprise Finance Guarantee programme provided the answer and the business is now investing in changes that will open up all sorts of new opportunities for us. Floyd Timms

More information on the EFG can be found in a dedicated section on the British Business Bank website.

Further Information

Notes to editors

About the British Business Bank

The British Business Bank is the UK’s national economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.

British Business Bank programmes support more than £3.4bn of finance to more than 59,000 smaller businesses and participate in a further £5.8bn finance to small mid-cap businesses (as at end March 2016-17).

As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options, including asset finance, available to smaller businesses.

British Business Bank plc is a limited company registered in England and Wales, registration number 08616013, registered office at Steel City House, West Street, Sheffield, S1 2GQ.

As the holding company of the group operating under the trading name of British Business Bank, it is a development bank wholly owned by HM Government which is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates under its own brand name through a number of subsidiaries, one of which is authorised and regulated by the FCA.

More information, including a legal structure chart for British Business Bank plc and its subsidiaries, can be found on the British Business Bank website.

About the Enterprise Finance Guarantee

The British Business Bank’s Enterprise Finance Guarantee (EFG) facilitates business finance to smaller businesses that have a sound borrowing proposal and robust business plan but are unable to obtain finance from their lender due to having insufficient security to meet the lender’s normal 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 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 of de minimis State aid beyond a particular threshold depending on the sector (usually euro 200,000 equivalent) over the previous three years

The borrower pays a 2% Guarantee Fee as a contribution towards the costs of the scheme.

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.

Regional breakdown, January 2009 to October 2017:

Region Drawn Loans (Vol) Drawn Loans (Val £)
East Midlands 2,088 230,688,256
East of England 2,394 258,051,966
London 3,747 441,152,887
North East 978 89,836,571
North West 3,877 391,307,961
Northern Ireland 290 41,189,397
Scotland 1,933 253,003,648
South East 3,778 403,635,176
South West 2,803 263,358,510
Wales 1,086 115,583,231
West Midlands 2,521 260,863,221
Yorkshire and The Humber 2,834 253,639,062
TOTAL 28,329 3,002,309,886

Top ten sectors lent to under EFG:

  1. Wholesale & retail trade; repair of motor vehicles & motorcycles
  2. Manufacturing
  3. Accommodation & food service activities
  4. Professional, scientific & technical activities
  5. Construction
  6. Human health & social work activities
  7. Information & communication
  8. Administrative & support service activities
  9. Transportation & storage
  10. Arts, entertainment & recreation