Small Firms Loan Guarantee

[superdon]

Hi,

I am taking a loan shortly to start a new venture. As I have little in the way of security, the bank are using the SFLG scheme to secure 75% of the loan.

A little bit of a pessimistic view, but what happens if the business fails and I am unable to repay the loan?

Will the government/bank sue me for the outstanding amounts? In which case I would risk loosing my house and so on?

Just trying to understand to what point the government/bank will chase me for the money. I obviously realise that a loan has to be repaid and am not trying to find out a way of "getting out of it". I am just trying to make plans should the worst happen.

If it helps, the loan is in the region of £30,000.

Any ideas would be appreciated.

[Danielw]

Hi there,

I happen to work for a finance company that lends similar amounts on the DTI SFLG scheme.

Don't worry about being sued by the government, this won't happen as the government are not the primary lender, nor do they actually take security form you as an individual. They simply guarantee 75% of the loan to the lender. The lender may take some type of personal security from you as an individual, however this is likely to be a 'token' sum, and maybe taken to reflect any other lending in the deal.

In respect of repayment of the loan, this will presumably be agreed with the lender prior to you taking the loan. Repayment deadlines are all enforced by the lender, the DTI has no involvement at all.

Feel free to email me with any questions,

Daniel

[superdon]

Thanks Daniel.

As it happens after a meeting with our previous business bank, HSBC, they are prepared to offer a totally unsecured business loan to us :)