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- Applying for a loan under the National Loan Guarantee Scheme
Businesses wishing to apply for a loan under the new National Loan Guarantee Scheme should contact one or more of the participating banks. The loan application process is broadly the same as it would be under a regular commercial loan, in as far as the bank’s usual lending criteria will apply. This means that, in some cases, lending offers may be subject to certain security measures, such as a personal guarantee.
- Which banks can I apply to under the new scheme?
The scheme opened with four highstreet banks (Aldermore, Barclays, Santander, Lloyds and Royal Bank of Scotland) all taking part. The participating banks may cease to participate in the scheme, depending on certain market conditions, and similarly, banking institutions not currently taking part may do so later on in the course of the scheme.
- Is my company eligible for a loan under the National Loan Guarantee Scheme?
Your business will be eligible to apply for a loan under the National Loan Guarantee Scheme provided that it meets the following 3 criteria:
1. The annual turnover (sales) of the company do not exceed £50 million in the most recent set of financial accounts or management accounts.
2. The company is a UK business (specifically, a material element of the business’s activity takes part in the UK). Your bank will be able to confirm whether your business meets this criteria.
3. The company is not in financial difficulty.
- How will my company benefit from the National Loan Guarantee Scheme?
If your business draws down a loan under the National Loan Guarantee Scheme, it will receive a discount on that loan of 1 percentage point over the standard rate of interest payable on the loan. The actual rate paid (before this 1%-point is removed) will vary between banks and according to their own pricing structures.
- Which lending products does the National Loan Guarantee Scheme cover?
The banks which have chosen to participate in the scheme are able to offer the discount on 3 types of new lending (term loans, hire purchase agreements and lease agreements). The refinancing of existing debt, where the term of the debt (or the amount borrowed) changes, will also fall under the new scheme. There is a minimum term of 1 year on all NLGS loans.The scheme DOES NOT discount the rates chargeable on business overdrafts, revolving credit facilities, invoice finance facilities or business credit cards.Note that the actual products offered by each bank may differ slightly.
- How much can we borrow under the NLGS?
The individual limits (upper and lower) for NLGS loans will be determined by the banks themselves.
- Does the scheme guarantee the loan/interest repayment?
No – the loans are not guaranteed and the government provides no underlying security or collateral. The borrower shall remain fully liable for the repayment of all NLGS loans in accordance with the individual loan documentation in place for such facilities.
- My company is eligible under the 3 criteria listed above – is my application guaranteed?
No – the banks remain the sole responsible party in terms of approving or rejecting loan appliactions. Their lending criteria has not changed and the government does not have any role in their decision to approve or reject an application.
- How many loans can we have under the NLGS?
There is no government limit to the number of loans or loan applications your company can make. It is the decision of the bank(s) in question to decide on individual loan applications, although the total benefit obtained through the NLGS scheme by each business may be capped under State aid rules.
- Which sectors / industries are more likely to be approved?
There are no specific sectors which are more (or less) likely to be approved, however, State aid rules apply differently to different firms in certain industries (including agriculture, fisheries, road freight transport and primary products). Further information about these can be found in the State aid handbook
- I’ve been turned down for an NLGS loan – can I appeal the decision?
Businesses who have been turned down for an NLGS loan should appeal to the banks using the existing appeals processes.