Access to finance continues to be a pressing concern for many UK small and medium-sized enterprises (SMEs), especially in a landscape shaped by inflation, high operating costs, and cautious lending. That’s why the Chancelor has refreshed its existing support framework through the launch of the Growth Guarantee Scheme (“GGS”), which is an updated version of the Recovery Loan Scheme (“RLS”) and CBILS loan initiatives.
This article offers a summary of the GGS and outlines the key considerations for borrowers when considering it as part of their funding strategy.
Background on the Growth Guarantee Scheme
Administered by the British Business Bank (“BBB”), the GGS is targeted primarily at small and medium-sized enterprises (“SMEs”) across the UK with an annual turnover of up to £45 million. These businesses, who are backbone of the UK economy, often find it challenging to secure finance through traditional commercial routes due to limited collateral, short trading history, or inconsistent cash flows. The scheme is designed to help viable companies overcome these barriers by enabling accredited lenders to offer loans backed by a 70% government guarantee thus reducing the risk for the lender while maintaining commercial decision-making.
Like the RLS and CBILS, crucially, the GGS is not a grant or subsidy. It’s a guarantee to the lender, not the borrower. Businesses remain 100% liable for repayment of the loan, but the presence of the guarantee makes lenders more willing to extend credit to firms that may otherwise be declined. The BBB plays a central role in overseeing the scheme, accrediting lenders, monitoring delivery, and ensuring the programme meets its policy objectives, which include supporting business investment, protecting jobs, and driving regional economic growth.
As with its predecessor, the Growth Guarantee Scheme is a temporary measure with a defined end date, currently scheduled to run until 31 March 2026. It is a key part of the government’s broader efforts to build a more dynamic, innovation-led economy, with SMEs at its core.
Eligibility Criteria
- Turnover: Up to £45 million (on a group basis)
- UK Trading Activity: Over 50 % income from UK-based trade
- Viability: A commercially with no insolvency proceedings
- Subsidy Limits: Borrowers must confirm they remain within de minimis subsidy thresholds under UK/EU rules viable business proposition
Key Considerations for Borrowers & Lenders
- Optimising the £2 million cap
Borrowers could combine a GGS-backed bilateral a cash flow-based term loan with non-GGS loans funded outside the scheme, (e.g. asset based finance). This modular approach would help to maximise debt capacity above the £2m cap but at the same time the borrower would remain compliant with the requirements of the GGS scheme.
- Credit approval process
Despite the guarantee, lenders retain full authority over credit assessment, so borrowers must still meet financial health, collateral requirements. BBB does not override lender underwriting standards, nevertheless the guarantee is helpful, particularly in situations where there are no collateral supporting the loan.
- Using the Growth Guarantee Scheme to refinance CBILS, BBLS, or RLS Loans
One of the practical features of the Growth Guarantee Scheme is that it allows refinancing of existing government guaranteed loans, including CBILS, BBLS, and RLS, in certain circumstances. This can help businesses restructure their debt, secure better repayment terms, or consolidate facilities to improve cash flow.
- Subsidy Awareness
Businesses must track other public support to avoid exceeding subsidy caps within a rolling three-year window.
Conclusion
The Growth Guarantee Scheme is a powerful, targeted tool for UK SMEs aiming to scale, invest, or strengthen financial resilience. With a 70 % guarantee for loans of up to £2m and broad product choice, covering term loans, overdrafts, asset finance, invoice finance and asset-based lending facilities, GGS helps to support lending to a segment of the market where there is often limited choice for borrowers.
Strategically combining GGS support with non-guaranteed debt products allows firms to maximise debt capacity while managing lender risk appetite. Critically, applicants must satisfy the lender’s normal credit criteria. However, the presence of the guarantee definitely helps institutions to extend credit to borrowers particularly where there is a shortage of collateral.
How We Can Help
Navigating funding schemes like the GGS can be complex, especially when weighing options across different lenders or structuring applications to meet eligibility and creditworthiness requirements.
We work closely with businesses to:
- Assess eligibility and determine whether the GGS is a suitable route to finance.
- Compare offers/options from accredited lenders and identify the most appropriate facility – whether term loans, asset finance, or overdraft solutions.
- Support the credit process, including preparing the necessary documentation and financial projections.
- Provide strategic funding advice, aligning short-term cash flow needs with long-term business goals.
Additionally, through our close relationships with accredited lenders, we offer valuable insight into current lending appetite, decision-making criteria, and sector-specific considerations that can increase the likelihood of a successful application.
If you’re considering applying under the scheme or want to explore your funding options more broadly, please get in touch.
