The Growth Guarantee Scheme Explained
The Growth Guarantee Scheme (GGS) is a UK government-backed initiative designed to help smaller businesses access finance on more favourable terms. It launched on 1 July 2024 as the successor to the Recovery Loan Scheme and will run until at least 31 March 2026.
The aim of the scheme is simple: to support businesses that may otherwise find it difficult to raise finance. Whether you’re looking to invest in growth, manage cashflow, or purchase equipment, GGS offers a route to funding that might not otherwise be available.
How the Scheme Works
Under the Growth Guarantee Scheme, businesses can borrow up to £2 million per group (or £1 million in some cases where EU rules still apply). The types of finance available are wide-ranging. Depending on the lender, you could access term loans, overdrafts, invoice finance, asset finance or even asset-based lending.
Loan terms typically range from three months up to six years for loans and asset finance. Overdrafts, invoice finance and some other products are usually shorter in duration, often up to three years.
The key feature of the scheme is the government guarantee. The UK government guarantees 70% of the outstanding balance to the lender if the borrower defaults. Importantly, this protection is for the lender, not the borrower. You are still fully responsible for repaying the loan.
Who Is Eligible?
To qualify for the Growth Guarantee Scheme, your business must have a turnover of up to £45 million and be based in the UK. Most businesses will also need to demonstrate that more than 50% of their income comes from trading activity rather than passive investments.
Your business must be considered viable, meaning you can show you have the ability to repay the loan, and it must not be in financial difficulty or formal insolvency proceedings. There are also restrictions on which industries can apply, with banks, insurers, public bodies and state-funded schools generally excluded.
Lenders may require security or personal guarantees, depending on their own commercial policy. However, your principal private residence cannot be used as security under the scheme.
What Can the Funds Be Used For?
Funds borrowed through the Growth Guarantee Scheme can be used for most legitimate business purposes. That includes working capital, investment in growth, or simply smoothing out cashflow.
Businesses that have already made use of other government-backed schemes such as CBILS, BBLS or the Recovery Loan Scheme can still apply for the Growth Guarantee Scheme, provided they meet the eligibility requirements.
Benefits and Considerations
The Growth Guarantee Scheme has several benefits. It makes it possible to borrow larger sums of money — up to £2 million — which may otherwise be difficult to access. The government guarantee gives lenders confidence, which can increase your chances of being approved for finance. The flexibility of the scheme, with multiple types of finance available, also means it can be tailored to suit different business needs.
At the same time, it’s important to understand the limitations. The government guarantee does not remove your liability. You will still be responsible for 100% of the debt. Different lenders set their own interest rates, fees and security requirements, so terms will vary. Previous subsidies you have received may also affect how much you can borrow.
Is It Right for Your Business?
The Growth Guarantee Scheme is a valuable option for SMEs who need funding to grow or stabilise their business. If you have a viable business plan but have found traditional lending difficult, this scheme may open up opportunities for you.
Before applying, consider whether your business can comfortably afford the repayments and make sure you understand the costs involved.
Final Word
The Growth Guarantee Scheme is a welcome development for UK businesses, continuing the support that began with earlier government-backed programmes. It provides access to essential finance at a time when many companies are looking to invest and expand.
This article is for information purposes only and does not constitute financial advice.
If you’d like tailored guidance, we can connect you with one of our brokers who can review your eligibility, compare offers from accredited lenders, and help you find the right finance option for your business.
