January 2007 NACFB News

Boost business growth with the Small Firms Loan Guarantee and State Securities
By Andrew Bullard

Boost business growth with the Small Firms
Loan Guarantee and State Securities

"...The Government-backed Small Firms Loan Guarantee (SFLG) has been set up specifically to help smaller firms grow..."

Did you know that smaller companies can access finance to help them grow their businesses even though they may not have sufficient security in their assets or property?

The Government-backed Small Firms Loan Guarantee (SFLG) has been set up specifically to help smaller firms grow and State Securities is one of the few independent UK asset based lenders that can offer this facility as part of its standard lending criteria.

The SFLG is a UK wide government backed DTI facility dedicated to helping UK based SMEs access funding when sufficient security is unavailable and conventional secured finance is inaccessible. The SFLG does not provide loans – in exchange for a modest guarantee premium the DTI guarantees 75% of the value of loans from approved lenders. Loans are available to sole traders, partnerships and limited companies that have been trading up to five years. The SFLG is most appropriate for overcoming the difficulties faced by small firms and new businesses in accessing finance from traditional lenders and has the following criteria:

• 75% of the loan is guaranteed by the Government
• Maximum turnover is £5.6m for all eligible businesses
• Minimum loan £25,001, maximum loan £250,000 available for companies trading up to five years
• Loans are available to sole traders, partnerships and limited companies
• Loans available for most business borrowing purposes including project finance, start-ups, business expansion, efficiency improvement
• Subject to dti approval
• Available for most business and borrowing purposes

(State Securities only offer the SFLG where we are able to provide separate funding (asset finance, factoring and/or a commercial mortgage) and normal State Securities lending criteria apply.)

The SFLG facility is flexible too. A recent example is a new start engineering company that approached us looking to fund machinery worth £840,000 to allow it to honour existing customer contracts and increase its production capacity. The company was formed out of a previous administration and had no deposit. The deal was also complicated by several suppliers being involved, some of which were based in Germany, and the company had cash flow issues. However, a deal was structured that involved using a £250,000 SFLG as a deposit with VAT deferred until the end of the customer’s VAT quarter. Also, a payment holiday and interest-only payments for the first three months of the SFLG were set up to help the company. As State Securities arranged the SFLG and funded the deal, the company was then able to acquire the engineering machinery and has since expanded with its cash flow remaining uninterrupted.

If you would like to know more about how the SFLG and State Securities could help your clients’ businesses grow, then please contact Andrew Bullard at State Securities on 01489 775600 or email abullard@statesecurities.plc.uk