The Growth Guarantee Scheme UK – How It Works and Who Qualifies

Is your UK-based small business ready for the next step in growth but held back by limited access to finance? The Growth Guarantee Scheme might be just the solution you need, offering not only funding for expansion and investment in your business infrastructure but also expert business guidance.

Overview of the Growth Guarantee Scheme

Launched in July 2024 as the successor to earlier recovery and coronavirus loan schemes, the Growth Guarantee Scheme is designed to help ambitious UK businesses invest in their future. In partnership with the British Business Bank, this scheme aims to boost economic growth by removing financial hurdles and ensuring businesses can manage their day-to-day operations with a healthy business current account. The growth guarantee scheme is a flagship initiative that empowers businesses to make crucial investment decisions, further stimulating robust economic activity across the nation.

Under the scheme, businesses can access a variety of finance options—including loans, overdrafts, and asset finance—with a 70% government guarantee backing. This guarantee helps reduce the risks for lenders and borrowers alike, offering better loan conditions and easing the path to growth. With these supports in place, businesses have the stability to explore new markets and innovate without excessive financial strain. The growth guarantee scheme continues to provide dynamic support as companies execute strategic investments and benefit from available capital allowances.

Who Qualifies

The scheme is geared toward smaller UK businesses with an annual turnover of up to £45 million. To be eligible, your business must:

• Be a trading entity based in the United Kingdom, with at least 50% of its income coming from genuine trading activity.
• Generate over 50% of its income from trading activities.
• Show financial stability with a healthy business current account.
• Provide a solid business plan and financial statements to prove viability.
• Not be a business in difficulty or involved in insolvency proceedings.
• Stay within allowed subsidy limits to ensure financial compliance.

These criteria, combined with the expertise of the British Business Bank, are designed to balance growth potential with sound financial management, ensuring the success of the growth guarantee scheme.

Key Features of the Growth Guarantee Scheme

• Loan Limits: Businesses outside the Northern Ireland Protocol can access up to £2m per group, while those within the Protocol have a cap of £1m. Minimum facility sizes start at £1,000 for asset and invoice finance, and at £25,001 for term loans and overdrafts.
  
  
• Multiple Scheme Access: If your business has received previous support from programs like CBILS, CLBILS, BBLS, or RLS (before 30 June 2024), you may still be eligible for this scheme, although previous borrowing might reduce the available amount.
  
  
• Government Guarantee: A 70% government-backed guarantee covers the outstanding balance after the lender’s standard recovery process. Remember, you remain fully responsible for the full debt.
  
  
• Interest Rates and Fees: Rates and fees vary depending on the specific lending agreement. Lenders take into account the government guarantee and its fee when setting terms.
  
  
• Personal Guarantees: While lenders may require personal guarantees based on their usual practices, note that your primary residence cannot be used as security.
  
  
• Lender Discretion: The final decision on a GGS-backed loan rests with the lender, who will carry out their usual credit and fraud checks. Guidance from business advisors and additional business guidance from experts at the British Business Bank further support the process.
  
  
• Additional Benefits: Businesses can also benefit from capital allowances which provide tax relief on qualifying investments, adding yet another layer of support under the growth guarantee scheme.

Types of Financing Available

The scheme offers a range of financing options tailored to meet the unique needs of smaller businesses:

• Term Loans and Overdrafts: Term loans provide funding for business expansion over periods ranging from three months to six years. Overdrafts offer the flexibility needed for day-to-day operations, available for periods from three months to three years.
• Asset and Invoice Finance: Asset finance and invoice finance allow you to use your existing assets as collateral, unlocking funds based on asset or invoice value. This supports both short-term liquidity and long-term growth with a strong investment focus. The growth guarantee scheme supports businesses in making smart investments without diluting ownership.

How to Secure a Loan

To take advantage of the scheme, follow these steps:

1. Choose a Lender: Find an accredited lender that fits your business goals and understands the opportunities available through the growth guarantee scheme. 
   
   
2. Prepare Your Documentation: Gather financial statements, business plans, and details of your current account. Ensure you also have documentation on any capital allowances or prior trading activity that might support your application.
   
   
3. Submit Your Application: Provide accurate information to demonstrate your business’s financial health.
   
   
4. Review Offers: Evaluate the terms and fees from different lenders, and consider expert business guidance from advisors at the British Business Bank.

Being proactive and well-prepared will help you secure the best possible terms and position your business for future success, making full use of the growth guarantee scheme. All of these steps can be streamlined by using a broker like Finance Nation.

Understanding Interest Rates and Fees

When considering finance under the scheme, it’s important to understand how interest rates and fees are structured. Rates typically include the lender’s margin plus the Bank of England Base Rate, and an arrangement fee applies from the start. Additional fees might also be charged based on the specific terms of your agreement. This transparent fee structure, coupled with expert advice, helps you make informed decisions that align with your financial goals.

Subsidy Limits and Implications

The scheme is subject to subsidy limits, meaning the total government support provided cannot exceed a set threshold over a rolling three-year period. If your business has received previous support—such as from the coronavirus business interruption loan scheme—this may impact the funds available under the Growth Guarantee Scheme.

Keeping accurate records and understanding your subsidy limits is essential for staying compliant and maximising your funding opportunities. The growth guarantee scheme is designed to work within these limits while encouraging steady and responsible economic activity.

The Role of Lenders

Lenders play a critical role in the scheme. They assess your application, run credit and fraud checks, and determine the best financial package for your needs.

By working closely with the British Business Bank and expert advisors, lenders help ensure that businesses are supported with competitive and tailored financing options. The growth guarantee scheme relies heavily on this collaborative approach to enable investment and sustained economic activity.

How Can a Broker Help in Securing a Loan Under the Growth Guarantee Scheme

A broker plays a crucial role in navigating the complexities of the Growth Guarantee Scheme. Here’s how they can help:

• Expert Guidance: Brokers are well-versed in the nuances of the scheme and can provide tailored advice on the best financing options for your business.
  
  
• Access to Multiple Lenders: They have established relationships with a range of accredited lenders. This network increases your chances of finding the best possible loan terms that match your business needs.
  
  
• Streamlined Application Process: A broker assists with gathering and organising necessary documentation, ensuring that your financial statements, business plans, and current account details are in order. This attention to detail helps expedite the approval process.
  
  
• Personalised Recommendations: Based on your business’s profile and financial health, a broker can recommend the most suitable products—whether it's term loans, overdrafts, or asset and invoice finance—ensuring you get the right support for your expansion plans.
  
  
• Ongoing Support: From initial consultation through to finalising the loan, brokers offer ongoing guidance. They help you understand the terms, interest rates, fees, and any other conditions, ensuring you’re comfortable and informed every step of the way.

By partnering with a broker, you not only simplify the application process but also enhance your chances of securing a favourable loan that supports your business growth.

Finance Nation

Finance Nation is a finance broker that understands the challenges businesses face in securing affordable and efficient funding. We work to streamline the entire process using our advanced Fintech platform, ensuring you access competitive lending products that might not be available elsewhere. Our goal is to build lasting relationships and provide the most cost-effective loan solutions to help your business thrive.

Ready to explore your options under the Growth Guarantee Scheme? The growth guarantee scheme remains at the forefront of enabling investment and financial support for businesses ready to enhance their trading activity and overall economic activity.

Contact us today and book a call to discuss your next steps forward!