British Business Bank seeks new lenders for EFG scheme

By Ryan Weeks on Tuesday 21 June 2016

Alternative Lending

The British Business Bank is opening up the Enterprise Finance Guarantee (EFG) programme to new lenders.

The British Business Bank has today opened up the EFG accreditation process with the specific intention of bringing a range of new lenders into the scheme. The EFG in fact pre-dates the Bank itself, having been launched in 2009 as a means of encouraging lending to UK businesses that had been turned down for a loan due to inadequate security. The scheme aims to support lending businesses that can plug this gap. Such businesses include the high street banks, smaller specialist lenders, invoice finance providers and community lenders. EFG provides accredited lenders with a government-backed guarantee for 75% of the loan value (subject to a cap on total guaranteed lending across the lender’s loan book).

The programme currently supports £200-300m of SME funding per annum. These funds are delivered by over 40 accredited lenders partners. But a glaring omission from that membership, as it stands, are representatives of the UK’s flourishing alternative business lending sector. No MarketInvoice. No Liberis. No Just Cash Flow PLC, or GapCap, or Fleximize. In fact, there are no lenders that we’d consider “alternative” at all.

The Bank published its “Enterprise Finance Guarantee Strategic and Operational Design Review 2015/6” in April. This review highlighted the need for an increase in the number and diversity of EFG accredited lenders, as well as the need to broaden the range of products that could be supported by the EFG. One of the key recommendations in the report was to engage further with asset finance sector in order to better support small businesses. It was this that led to the opening up of the accreditation process for new lenders.

But will these “new lenders” bite? James Sherwin-Smith, CEO of Growth Street – an alternative business overdraft platform, said: "As an alternative overdraft provider to SMEs, Growth Street is delighted that the British Business Bank is opening up the EFG scheme to new lenders, and is placing revolving credit facilities (including overdrafts and invoice financing) firmly within their scope. With overdraft lending to SMEs down 50% in less than 4 years, we look forward to working with the British Business Bank to ensure more SMEs can access the fairly-priced, short term working capital essential for growth."

Judith Ozcan, Managing Director at the British Business Bank, offered his take: “We look forward to welcoming new lenders onto the already-successful Enterprise Finance Guarantee programme. EFG has, since its launch in 2009, supported the provision of more than £2.7bn of finance to more than 25,000 smaller businesses in the UK.”

Lenders may find out more information about accreditation by contacting the British Business Bank

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