If you\u2019re a UK business looking for a business loan or another form of finance to help with your growth plans, then the government-backed Growth Guarantee Scheme aims to improve the terms on offer to businesses needing to borrow funds.<\/p>
The Growth Guarantee Scheme is designed to support access to finance for smaller UK businesses as they look to invest and grow. <\/p>
The scheme is operated by the government-backed British Business Bank and it was launched on 1 July 2024. It\u2019s the successor to the Recovery Loan Scheme, which started in 2021 to help businesses recover from the COVID-19 pandemic.<\/p>
The Growth Guarantee Scheme currently works with over 40 accredited lenders \u2013 the likes of Lloyds, HSBC, Santander, NatWest, Atom Bank and Funding Circle.<\/p>
The different accredited lenders have a wide range of products they can offer businesses, including term loans, overdrafts, asset finance, invoice finance and asset-based lending.<\/p>
The Growth Guarantee Scheme provides the lender with a 70% government-backed guarantee on the business finance it offers, up to a limit of \u00a32 million (or \u00a31 million if the business borrower falls within the scope of the Northern Ireland Protocol).<\/p>
Businesses can use the borrowed finance for any legitimate business purpose \u2013 including managing cash flow and investment \u2013 although they must be able to demonstrate they can afford to take on the debt.<\/p>
It\u2019s worth noting that although the Growth Guarantee Scheme aims to improve the terms on offer to borrowers, if the accredited lender can offer a commercial loan (not one backed by the scheme) on better terms, then they will do so.<\/p>
If you\u2019re thinking about applying for this scheme, here are some features to consider: <\/p>
To be eligible to apply for business finance under the Growth Guarantee Scheme, you must be a smaller business (or business group) with a turnover no greater than \u00a345 million.<\/p>
Your business needs to be UK-based and be generating 50% of its income from trading activity.<\/p>
The lender will want to see you have a viable business proposition and that your business is not in any difficulty or involved in any insolvency proceedings.<\/p>
Borrowers will also need to confirm that any funds they receive under the Growth Guarantee Scheme will mean they don\u2019t exceed the maximum amount of any public subsidy they\u2019re allowed to receive.<\/p>
Businesses that previously took out a coronavirus-related business loan (a CBILS, CLBILS or BBLS loan), or a Recovery Loan Scheme loan before 30 June 2024, are not prevented from accessing the Growth Guarantee Scheme, but any borrowing under those previous schemes may reduce the maximum amount of funding the business can access through the Growth Guarantee Scheme.<\/p>
You need to look at the list of accredited lenders on the Growth Guarantee Scheme, and apply to them directly (usually online) for the type of business loan or other business financing that you\u2019re after.<\/p>
Remember that not every accredited lender on the list provides every type of finance, and the amount of finance offered will vary between lenders.<\/p>
The lender will then make a decision on your application. If it can offer a commercial business loan on better terms than a scheme-backed one, then it will do so. If that\u2019s not the case, and you\u2019re eligible for support under the Growth Guarantee Scheme, a lender can use it to help offer you the finance you need.<\/p>
If one lender turns you down, you can still approach other lenders on the scheme.<\/p>
If your business is just starting out, you might want to consider another government-backed loans programme, called the Start Up Loans scheme, which is operated by the British Business Bank.<\/p>
This type of loan is unsecured, there\u2019s a fixed interest rate of 6% per annum, and the loan repayment term can be between 1 and 5 years. All owners or partners in a business can individually apply for up to \u00a325,000 each, with a maximum of \u00a3100,000 available per business.<\/p>
If you\u2019re after a general non-government-backed business loan from a lender, then you can compare all your options in our guide to the best business loans<\/a>.<\/p> If your business is looking for funds to finance its growth plans, then it\u2019s worth looking at the Growth Guarantee Scheme and exploring whether you\u2019re eligible. There are various types of business loans and finance options available from different lenders as part of this scheme.<\/p> Although this government-backed programme aims to improve the terms on offer to business borrowers, it\u2019s still always worth checking whether you can get a better deal elsewhere<\/p>Bottom line<\/h3>
Compare business loans<\/h3>