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Peer2Peer Finance News | May 26, 2019

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British Business Bank’s EFG scheme hits £3bn lending milestone

British Business Bank’s EFG scheme hits £3bn lending milestone
Suzie Neuwirth

BRITISH Business Bank (BBB) has lent more than £3bn to smaller businesses that would struggle to obtain finance, through its enterprise finance guarantee (EFG) programme.

The initiative provides loans ranging between £1,000 and £1.2m to small firms that would have been – or already have been – turned down for debt finance because they are not able to provide sufficient security for the loan.

Launched in 2009, the programme provides its accredited lenders with a government-backed guarantee for 75 per cent of the loan value.

To date it has provided over 28,300 business loans, at an average value of £105,000.

Read more: British Business Bank’s commercial arm unveils big jump in profits

There are around 40 accredited lenders on the scheme, including Newable, Santander and Metro Bank. There are currently no peer-to-peer lenders on the list, although they are welcome to apply.

RateSetter’s head of commercial finance Paul Marston previously expressed an interest in the programme to Peer2Peer Finance News.

“In the UK, over 28,000 loans with a total value of £3bn, have been made to smaller business in sectors as diverse as retail to construction, the arts to support services,” said Reinald de Monchy, BBB’s managing director for guarantee and wholesale solutions.

“The EFG is an important option for smaller businesses who need access to finance to grow, but struggle to meet the lender’s normal security requirements. £3bn in lending is a major milestone for the programme, making a real difference to the many thousands of businesses it has supported.”

Read more: P2P lenders helped British Business Bank fund £717m of SME loans last year

Small business minister Margot James heralded the EFG programme reaching its new lending milestone.

“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,” she said.

“Today’s £3bn lending milestone shows just how much government support is available to help ensure small businesses get the access to finance they need to succeed.”

The EFG scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

To be eligible for support via EFG, the small business must be UK based, with a turnover of no more than £41m per year. 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.

Wholesale and retail trade, alongside motor vehicle repair, are the most popular sectors lent to via the scheme, followed by manufacturing.