Small Firms Loan Guarantee Scheme

This is in theory a superb scheme. In practice finding a lender willing to lend you money under the scheme is can be more difficult than finding a Man U supporter in Manchester.

The Scheme guarantees loans from banks and other financial institutions for small businesses with viable business proposals, which have tried and failed to obtain a conventional loan because of a lack of security.

Loans are available for periods between 2 and 10 years on sums from £5,000 to £100,000 (£250,000 in the case of businesses that have been trading for more than 2 years). DTI guarantees 70% of the loan (85% in the case of businesses trading for more than 2 years).

Qualification is restricted to new and existing UK companies with an annual turnover no greater than £1.5m (£3m in the case of manufacturers). Many business activities are eligible but there are a number of exclusions. Loans are available for most business purposes although there are a number of restrictions.

The reason for the apparent difficulty in obtaining loans through the scheme is probably because of its reputation as a last resort lending which has resulted in a stigma which may take years to overcome.