Thousands of start-up firms will now find it easier to gain access to finance as changes to a government loan scheme widen the tent for eligibility but limit access to young businesses.
Under the new rules, which took effect yesterday, applicants to the Department of Trade and Industry's (DTI) Small Firms Loan Guarantee (SFLG) may qualify for a loan with an annual turnover of up to £5.6m.
However, in a key change, the new rules will limit funding to businesses under five years old in a push to boost the growth rate of start-ups and young firms.
The DTI said its impetus in revising the rules was to help young firms build up a financial track record and assets against which they can secure funding, a process in which they have traditionally had the least opportunity.
The previous rules allowed only businesses that have been trading for over five years to apply for funding through the SFLG.
The changes have also expanded lending limits so that firms may borrow up to £250,000 under the scheme. This applies to all eligible small and medium-sized businesses.
"The Small Firms Loan Guarantee has enabled thousands of businesses to access around £4bn worth of loans that would not otherwise have been possible, and with these new changes we can now provide an even more consistent and strategic approach to help thousands more in the future," said competitiveness minister Barry Gardiner.
The rules change has also removed limits on the level of borrowing with which individuals can be associated. From now on, lending decisions must be based on the quality of the business case, not the previous borrowing history of those involved with the company.
