I got approved for the Enterprise Finance Guarantee

The challenge

Securing bank finance through the Enterprise Finance Guarantee (EFG), even though we were one of the first to apply.

We managed to close a very decent-sized contract with one of the major UK contract utility companies. We had to deliver within a certain amount of time otherwise we would have lost it. That meant we needed extra working capital. If we didn't manage to get the financing in place we would have jeopardised the terms of the contract.

We'd heard the EFG scheme was coming out. I got in touch with our bank manager and said it sounded like a good scheme, and he found out about it. Because it was so new, we were more or less writing the rules as we went through. I take my hat off to RBS for being prepared to do that and test the waters.

We were extremely worried though because it was touch and go whether or not it would happen, and if it hadn't managed to come through it would have delayed our plans significantly and potentially jeopardised the contract.

But if we'd gone out to raise the money from the market, we would have been severely diluting our equity holding unnecessarily. We only needed working capital, not a huge amount.

The solution

We went straight to our own bank for funding. We had chosen it in the first place because it had a good track record for the Small Business Loan Guarantee scheme, which is now the Enterprise Finance Guarantee (EFG). We anticipated we'd want that at some stage.

I've heard of other people being rejected, but I think what helped us is that we met the two key criteria for the fund. We didn't immediately have an alternative source of funds and it was required to help finance an order book and not just to cover overheads or losses or something like that, which clearly the EFG scheme was not there to help finance.

What also helped is that we had always maintained a good relationship with our bank. We established regular meetings. We'd invited each other to things to keep each other up to speed about what was happening with the business. That meant that they knew exactly where we were and what the future of the business was looking like.

We got the full amount we wanted. The bank was extremely supportive in getting it through, and it took about four or five weeks.

Key lesson

Keep up your relationship with the bank. Keep them informed even when it doesn't necessarily seem there's much point in doing so. Have regular meetings every two or three months or conference calls to update them. It means things will move quickly when you do need them to materialise.

Top tip

Show a thought-through business plan and show that the numbers stack up month by month. Prove that if the contract is fulfilled in its entirety there's a good prospect of the bank being repaid the loan.

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