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Table of Contents
- What is the Growth Guarantee Scheme?
- What types of finance are available with the Growth Guarantee Scheme?
- Am I eligible for the Growth Guarantee Scheme?
- How do I apply for the Growth Guarantee Scheme?
- What are the interest rates and loan fees for the Growth Guarantee Scheme?
- When does the government’s Growth Guarantee Scheme close?
- What other help, grants or loans can I apply for?
The Growth Guarantee Scheme aims to help UK small businesses access the finance they need to invest and grow.
The scheme is backed by the UK government, with lenders receiving a 70% government guarantee to incentivise lending to small businesses in need of capital.
The Growth Guarantee Scheme launched on 1 July 2024. It is the successor to the Recovery Loan Scheme (RLS), which has now been discontinued.
Read on to learn all about the Growth Guarantee Scheme and to discover how to apply for government-backed funding for your small business.
What is the Growth Guarantee Scheme?
Compared with large firms – which may boast longer trading histories, bigger profits, and more assets – small businesses generally find it harder to access business finance on favourable terms.
The Growth Guarantee Scheme aims to level this playing field by helping small businesses access growth and investment finance on better terms than they might find elsewhere.
The Growth Guarantee Scheme’s accredited lenders offer a range of small business finance options: including business loans, business overdrafts and asset finance facilities.
For borrowers outside of the Northern Ireland Protocol (i.e., those based in Great Britain), the Growth Guarantee Scheme can provide access to finance facilities up to £2 million. For borrowers operating within the Protocol, the maximum facility is £1 million.
Loans and asset finance facilities accessed through the Growth Guarantee Scheme are available on terms from three months up to six years, while for overdrafts, invoice finance and asset based lending facilities, the maximum term is three years.
If an accredited lender is able to offer a commercial loan on better terms, they will.
The Growth Guarantee Scheme is administered by the British Business Bank. While the government provides lenders with a 70% guarantee for loans, you should know that you, as the borrower, will still be fully liable for repaying 100% of the debt you take on.
What does ‘government guaranteed’ mean?
In this case, ‘guaranteed’ means that if the lender can’t collect the loan from the borrower, then the government will reimburse the lender for a portion of the loan’s total value.
Although lenders don’t have to participate in the Growth Guarantee Scheme , the government guarantee makes the scheme more attractive to them.
With 70% of your loan amount guaranteed by the government, lenders have more security that they’ll get their money back if you can’t repay your loan.
What can a Growth Guarantee Scheme loan be used for?
You can use finance accessed via the Growth Guarantee Scheme for any legitimate business purpose, including investment and growing your business.
Other uses of Growth Guarantee Scheme finance could include:
- managing cash flow problems
- helping with payroll
- promoting your business
- launching a new product
- meeting a one-off cost
- covering seasonal trading demands
- buying equipment
- Investing in a business function, like marketing
» MORE: How to grow your business
What was the Recovery Loan Scheme?
The Recovery Loan Scheme was originally designed to help businesses recover and grow after disruption caused by Covid-19.
It was announced by the then Chancellor Rishi Sunak in his Budget speech in March 2021.
The scheme went through multiple iterations and extensions before closing on 30 June 2024.
It has now been extended once again and rebranded as the Growth Guarantee Scheme, which has similar objectives and offers a similar range of products to the Recovery Loan Scheme.
What types of finance are available with the Growth Guarantee Scheme?
The Growth Guarantee Scheme covers different types of business finance
Under the scheme, lenders can offer the following forms of funding:
- term loans
- overdrafts
- invoice finance
- asset finance
- asset-based lending facilities
How much you can borrow depends on the individual situation of your business and the type of finance that you require:
- For term loans and overdrafts, you can borrow from £25,001 to £2 million per business outside the scope of the Northern Ireland Protocol.
- For term loans and overdrafts within the Northern Ireland Protocol, you can borrow from £25,001 to £1 million per business – provided you don’t operate in the primary production agriculture, aquaculture or fisheries sectors .
- For invoice finance and asset finance, you can borrow from £1,000 to £2 million per business outside the scope of the Northern Ireland Protocol.
- For invoice finance and asset finance within the Northern Ireland Protocol, you can borrow from £1,000 to £1 million per business – provided you don’t operate in the primary production agriculture, aquaculture or fisheries sectors ..
Businesses in the scope of the Northern Ireland Protocol and operating in the primary agriculture, aquaculture, and fisheries sectors can borrow less than other types of businesses. See the website of the British Business Bank for more details.
Am I eligible for the Growth Guarantee Scheme?
There are various eligibility criteria that your business must meet if you would like to access finance through the Growth Guarantee Scheme.
You may be eligible if your business meets all the following requirements:
- Your business has an annual turnover that does not exceed £45 million.
- It is currently trading in the UK, with core business operations based in the UK.
- It generates more than 50% of income from its trading activity in the UK (unless you are a charity or further education establishment).
- It has a viable business proposition, in the eyes of a prospective lender.
- Your business is not in any difficulty.
- You are not running a bank or building society; insurer or reinsurer; a public sector body; a state-funded school; or an individual other than a sole trader or partner acting on behalf of a partnership.
What types of businesses are eligible for the Growth Guarantee Scheme?
As long as you meet the criteria above, then the Growth Guarantee Scheme is open to most business types. This covers:
- sole traders
- corporations
- limited partnerships
- limited liability partnerships
- co-operatives and community benefit societies
- any other legal entity carrying out business activity in the UK
Can I apply for the Growth Guarantee Scheme if I’ve received other government loans?
The Growth Guarantee Scheme is available even for businesses which have already received other kinds of government support.
Provided your business meets the eligibility criteria, you can still apply for a Growth Guarantee Scheme loan if your business has already taken out a Bounce Back Loan, Coronavirus Business Interruption Loan, Coronavirus Large Business Interruption Loan or Recovery Loan Scheme facility.
Just be aware that having accessed other kinds of government-backed finance could reduce the amount your business is able to borrow under the Growth Guarantee Scheme.
Can I apply for the Growth Guarantee Scheme if my business is a start up?
New businesses can apply for funding through the Growth Guarantee Scheme – provided they meet the eligibility criteria.
Whether your start-up business is approved for funding will be at the discretion of your Growth Guarantee Scheme lender.
The British Business Bank, which administers the Growth Guarantee Scheme, suggests that for start-up businesses in their first three years of trading, a British Business Bank Start Up Loan might be more suitable.
Can I access finance through the Growth Guarantee Scheme with bad credit?
Lenders will carry out a credit check before lending your business money as part of the Growth Guarantee Scheme.
If you have been refused credit in the past, you may still be eligible for a Growth Guarantee Loan – so bad credit is not necessarily a barrier to accessing finance.
Just bear in mind that your options may be more limited if your credit history is poor.
In this case, your business may be charged a higher interest rate and could have fewer borrowing options under the Growth Guarantee Scheme.
How do I apply for the Growth Guarantee Scheme?
The Growth Guarantee Scheme is open until 31 March 2026.
To access the scheme, you will need to choose an accredited Growth Guarantee Scheme lender and apply directly with them.
The list of accredited lenders and more information about the Growth Guarantee Scheme is available on the British Business Bank’s website.
Is there a credit check to get a loan through the Growth Guarantee Scheme?
All applicants for Growth Guarantee Scheme Loans will be credit checked by lenders. Lenders also have to carry out fraud checks.
When do I have to start repaying a Growth Guarantee Scheme loan?
When you need to start your Growth Guarantee Scheme repayments will depend on your lender, while how long you get to repay the loan depends on the type of finance you take out.
For term loans and asset finance, you’ll have from three months to six years to repay, while for overdrafts and invoice finance you’ll have from three months to three years to repay.
If you took out finance as part of the Recovery Loan Scheme (which the Growth Guarantee Scheme has now replaced), you may be able to receive a term extension up to a maximum of ten years, at the discretion of your lender.
What are the interest rates and loan fees for the Growth Guarantee Scheme?
The interest rates and fees for the Growth Guarantee Scheme vary from lender to lender, meaning you should carefully compare providers before applying.
However, lenders are obliged to pass on the economic benefit of their 70% government guarantee to the borrower.
Likewise, fees will vary between different types of financial products and providers, but up-front fees are capped at 5%.
Do I have to give a personal guarantee to get a loan through the Growth Guarantee Scheme?
Lenders are allowed to ask you for a personal guarantee before offering your business finance through the Growth Guarantee Scheme, but only if asking for a personal guarantee is part of the lender’s typical practice. Principal private residences are off limits, however, and cannot be taken as a security when applying for a loan through the Growth Guarantee Scheme.
When does the government’s Growth Guarantee Scheme close?
The Growth Guarantee Scheme will be available until 31 March 2026.
As happened with the Recovery Loan Scheme – which was extended multiple times – the government may review and extend the Growth Guarantee Scheme nearer the time.
What other help, grants or loans can I apply for?
If you are not eligible for the Growth Guarantee Scheme, then here are some good places to look for more support:
Business grants
If you cannot secure finance through the Growth Guarantee Scheme, then you could apply for a small business grant.
There are grants available across the UK, as well as dedicated schemes in England, Scotland, Wales and Northern Ireland.
You may also be able to find funding for specific groups, such as business grants for women.
Traditional business loans
If you do not meet the criteria for a loan through the Growth Guarantee Scheme, then you may instead consider applying for a traditional business loan.
If your business is a start up without much trading history, then you could consider applying for a start up business loan. The British Business Bank offers its own start up loans on competitive terms.
Free advice for businesses
You can call the government’s Business Support Service for free advice. Whether your business is based in England, Scotland, Wales or Northern Ireland, there is a dedicated government helpline for your nation, with online support also available for businesses in Great Britain.
Free advice if you’re in debt
If your business is in debt or you’re concerned it might soon be, the British Business Bank has plenty of information about how to manage your debts, how to improve your cash flow and where to get help in your home nation.
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