Interesting News

Press releases

Funding expansion for an SME

A government-backed scheme is providing SMEs with a vital opportunity to obtain loans at a time when sources of funding are scarce.

The Small Firms Loan Guarantee Scheme (SFLG) makes it easier for entrepreneurs and smaller businesses, which may have little or no security, to raise finance for expansion, particularly since restrictions on the length of time they have been established have been removed.

Richard Hurst, director of Southampton-based chartered accountants HWB and head of their corporate finance division, explained that the SFLG has been designed specifically for SMEs to gain access to loans when they would normally have been turned down by a bank, due to either a lack of security or an established track record.

“The Government introduced a temporary 20% uplift to the lenders’ allocation to £360 million which has increased the amount of finance available through the SFLG. They also removed restrictions on how long firms have been established, making it much more accessible,” said Richard.

“The changes are a positive move, offering a much-needed lifeline, but a large number of businesses remain unaware of its existence. Not only is it an opportunity for those businesses which would normally struggle to secure funding, but it also illustrates the government’s desire to support SMEs.”

Businesses with a turnover of less than £5.6 million are eligible and between £5,000 and £250,000 can be borrowed for up to 10 years, with the government guaranteeing 75% of the loan amount. Interest rates are typically between 3-4% above base rate, with an annual 2% charge on the loan’s outstanding balance, payable quarterly. The scheme was formerly available to businesses under five years old, but although this has been removed, there are still some restrictions on the types of industries that are eligible and purposes for which the loan can be used.

HWB client Dominic Phipps of BMX specialist Generation Bikes sought finance to launch his business. Richard Hurst supported him through the application process, developing the business plan and financial forecasts. “In the current banking climate I didn’t think I would have been able to develop my strategy, but HWB’s support ensured that I secured funding,” said Dominic.

Richard concluded: “The foundation of any application will be a good business plan, realistic financial forecasts and the resources in place to produce regular and reliable management information.”

HWB boasts a 60-strong team and is one of the largest independent practices in the region. The firm offers advice and guidance to many small to medium-sized businesses in sectors including construction, healthcare, manufacturing, leisure and professional services.

• 
• Follow our blog