Growth Guarantee Scheme available to boost business growth

With growth being the theme of the new Labour government, the British Business Bank recently launched the Growth Guarantee Scheme as a successor to the previous Recovery Loan Scheme.

Launched on 1 July 2024 and running until 31 March 2026, the new scheme has a focus on helping smaller businesses to grow, against a landscape of stable inflation and the prospect of falling interest rates later this year.

The scheme can generally support finance facility sizes of up to £2m and provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility after it has completed its normal recovery process. The borrower always remains 100% liable for the debt.

The new scheme aims to improve the terms on offer to businesses borrowing to grow, and the finance can be used for investment as well as managing working capital.

Preparation is key

Before considering an application, it is vital to ensure you have done your homework and have in place a viable business proposition that lenders can consider. 

This is why it is important to talk to a professional advisor with existing links to lenders beforehand to advise on the right approach to an application.

Key features of the scheme

The maximum amount of a facility provided under the Growth Guarantee Scheme (GGS) is generally £2m per business group.

Minimum facility sizes can start at £1,000 for asset finance, invoice finance and asset-based lending, and £25,001 for term loans and overdrafts. 

Term loans and asset finance facilities are available from three months up to six years, with overdrafts, invoice finance and asset based lending available from three months up to three years. 

Businesses that took out a previous Covid-related loan before 30 June 2024 can also access GGS, but those existing borrowings may reduce the maximum amount for which the borrower is eligible. 

Personal guarantees can be taken at the lender’s discretion, but principal private residences cannot be used as security.

Eligibility criteria

These include the following:

• The scheme is open to smaller businesses with a turnover of up to £45m (on a group basis, where part of a group);
• The borrower must be carrying out trading activity in the UK, generating more than 50% of its income from trading activity;
• The lender must consider that the borrower has a viable business proposition;; 
• The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings;
• Borrowers will need to provide written confirmation that receipt of the GGS facility will not mean that the business exceeds the maximum amount of subsidy they are allowed to receive. All borrowers in receipt of a subsidy from a publicly funded programme should be provided with a written statement, confirming the level and type of aid received

Further help available

We continue to work with our clients on cash flow projections, business plans and other financial projects to help them identify when funding may be required for their business.

Our team can help your business, so if you would like our help with identifying possible funding needs, or if your business requires a review, please contact our Funding Advisory Team for a conversation.