Introduction »

Accessible finance

The National Loan Guarantee Scheme (NLGS) was launched by the Government on the eve of Budget 2012 following initial proposals made in the last Autumn Statement. The aim is to help smaller businesses access cheaper finance. As such, it does not provide security on the individual loans that the banks lend to small businesses but the Treasury will underwrite the bonds issued to raise funds for business lending. This will enable the participating banks to borrow more cheaply. A business which then takes out an NLGS loan will receive a discount of 1% on the interest rate ordinarily payable, to that bank outside the scheme. Other key features of the scheme are listed below:

• An eligible business includes those with a turnover (group basis if relevant) not exceeding £50 million.
• The Government has not set minimum or maximum loans that may be made under the scheme, although each participating bank may have its own rules and some loans may be classified as State Aid. This means that a business may not receive more than EUR 200,000 worth of State Aid over any three year period.
• NGLS loans must be for a minimum of one year.
• Finance can be in the form of new term loans, hire purchase and leasing arrangements. Refinancing of existing facilities where the term or amount has changed is also permitted. Precisely which products are to be offered will be determined by each bank but the discount will not be offered on overdrafts, revolving credit, invoice finance and business credit cards.

Further information

The participating banks are Barclays, Bank of Scotland, Lloyds TSB, NatWest, RBS Santander and Aldermore. Full details of the loans offered by all the participating banks may be accessed from www.hm-treasury.gov.uk/nlgs.html

Introduction »