Loan Guarantee Scheme

Also found in: Acronyms.

Loan Guarantee Scheme (LGS)

a facility for encouraging the COMMERCIAL BANKS to provide LOAN finance to small firms who, because of the high risk involved or lack of collateral, are unable to obtain conventional loans. Under the scheme, the DEPARTMENT OF TRADE AND INDUSTRY guarantees repayment to the bank of (currently) 70% of the loan on default in return for an annual premium of 2.5% on the guaranteed portion of the loan.