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EFG Loans and the EU

official-bureaucrat-eu-border-control-immigration-politics-economics-ban-no-employee-officer-warns-controls-69216018You may or may  ot be aware of the purpose of the EFG loan but heres a concise description

The Enterprise Finance Guarantee ( EFG ) is a loan guarantee scheme to facilitate lending to viable businesses that have been turned down for a normal commercial loan due to a lack of security or a proven track record

A decent initiative of course and one that has served some of my clients very well but there are barriers of which the high street banks rather tepid enthusiasm towards this lending is often very obvious.

But unbeknown to me, until last week when a client of mine was refused, there is a bigger obstacle

The following restrictions, described in more detail below, arise from the EU de minimis regulations:

  •   Aid for Export
  •   Using EFG funding abroad
  •   Preferential use of domestic over imported goods
  •   Agriculture (including horticulture)
  •   Coal
  •   Fisheries
  •   Transport

    For eligible cases, as the EFG guarantee has made the difference between failure and success in accessing finance, the business is deemed to have been assisted by the Government, having received a “State Aid”.

    Like most of forms of SME assistance, EFG operates under the de minimis rules which specify that the maximum assistance which may be provided to any SME in any rolling three-year period is €200,000.

So there we have it. Simple lending towards SMEs who export (and it doesnt matter how much they export) is deemed as “state aid” by the EU and barred.

Make of that what you will but many will contend that assistance with lending is barely state aid and frankly its none of the EU’s business

And the thought crossed my  mind that quantative easing whereby banks are effectively injected with cash to lend, surely amounts to the same thing?


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