The Government-Backed Growth Guarantee Scheme

Government Launches Scheme to Continue Supporting SMEs

The Growth Guarantee Scheme (GGS), announced in the Spring 2024 Budget by the Chancellor of the Exchequer, marks a significant milestone in the UK Government’s efforts to continue supporting small and medium-sized enterprises (SMEs). The Growth Guarantee Scheme is due to run until 31st March 2030 and is an extension to, and rebranding of, the Recovery Loan Scheme (RLS), which in turn replaced previous initiatives like CBILS and Bounce Back Loans.

• Expected Benefits for SMEs
• Eligibility Criteria
• Headline Features
• How To Access The Scheme

Written by Saul Michelson

Head of Marketing

Degree and Post-Grad qualified with 23 years business-to-business experience, Saul is a well-rounded senior professional. A previous winner of Marketing Week’s ‘Best B2B Campaign’ award and two Construction Marketing Awards, Saul enjoys finding out what makes businesses tick and writing articles that get straight to the point.

What is the Growth Guarantee Scheme?
3 Key Features

This government-backed program builds upon the success of the RLS. It offers a 70% guarantee on loans up to £2 million (Great Britain) and £1 million (Northern Ireland) to participating lenders, who themselves determine suitability for the scheme alongside their other products. This guarantee provides added security to lenders, aiming to increase loan availability for SMEs, expected to benefit over 11,000 businesses and run until 31st March 2030.

So what is GGS?

The scheme is overseen and administered by the British Business Bank, being offered to UK businesses through the Bank’s lending partners who will assess eligibility and suitability for GGS alongside their other products. Brokers such as Portman work with a panel of lenders, including providers of GGS, to pair businesses with lenders whose products and appetite to lend, match the situation of their clients. One discussion with Portman allows you to cover a multitude of options.

The borrower remains 100% liable for the debt, but the loan does have a useful feature that a ‘Personal Private Residence’ cannot be taken as security under the scheme, though lenders often require signing of a personal guarantee, see point 4 for more on this.

At its core, the Growth Guarantee Scheme is a business loan aiming to increase access to finance for SMEs, thereby supporting their growth and sustainability. To achieve this goal, the scheme has several key features:

1. Government-backed guarantee to lenders

The scheme provides a 70% government guarantee to participating lenders on loans up to £2 million in Great Britain and £1 million in Northern Ireland. This guarantee helps mitigate the risk for lenders, encouraging them to lend to SMEs that may not meet traditional lending criteria. Its important to note that the borrower remains 100% liable for the debt.

2. Continuity of support

By extending and rebranding the RLS, the Growth Guarantee Scheme ensures continuity and consistency for both lenders and the business community. This stability is essential for fostering confidence and enabling businesses to plan for the future with certainty.

3. Increased access to finance

One of the primary objectives of the scheme is to broaden SMEs’ access to finance across various sectors and regions. By offering government-backed guarantees, the scheme encourages lenders to provide financing to a wider range of businesses, including those with limited collateral or credit history.

4. Principal private residences cannot be used as security

Loans can often involve a charge on your house as a security feature for the lender, meaning if you default on the loan, your home may be at risk. However, both the Recovery Loan Scheme and Growth Guarantee Scheme state that the ‘Lender cannot take your principal private residence as security’, which reduces risk for the borrower.

However, a lender may require you to sign a personal guarantee, which does obligate a borrower to satisfy the value of the guarantee, but provides more options through which to do so.

The British Business Bank has a comprehensive explanation of a personal guarantee in this context with illustrated example which we recommend having a quick read of.

Expected Benefits for SMEs: Increased Access to Finance and Support for Growth

Mitigation of risk

The government-backed guarantee offered by the Growth Guarantee Scheme mitigates risk for lenders, making them more willing to extend financing to SMEs that may not meet traditional lending criteria. By minimising risk, the scheme fosters a conducive environment for SME growth and innovation.

Long-term sustainability

By supporting SMEs in accessing finance and facilitating their growth initiatives, the Growth Guarantee Scheme promotes long-term sustainability within the SME sector. As SMEs thrive and expand, they contribute to job creation, innovation, and economic resilience. This, in turn, leads to a more vibrant and dynamic business ecosystem, with SMEs playing a central role in driving economic growth and prosperity.

Eligibility Criteria:

The British Business Bank’s accredited lending partners determine eligibility for the scheme. Whilst there are some broad eligibility criteria, lenders assess suitability alongside their other products and determine which you are offered.

If you want all the information up front and don’t want to go searching elsewhere, I’ve saved you the effort, the full eligibility criteria direct from the British Business Bank is below. Lenders might also add their own criteria and they will carry out their standard credit and fraud checks for all applicants.

• Turnover limit: The scheme is open to businesses with a turnover up to £45m, on a group basis where part of a group.
• UK-based: The borrower must be carrying out trading activity in the UK and, for most businesses, generating more than 50% of its income from trading activity.
• Viability test: GGS Accredited Lenders must consider that the borrower has a viable business proposition.
• Business in difficulty: The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings.
• Subsidy limits: Borrowers will need to provide written confirmation that receipt of the Growth Guarantee Scheme 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 payment received. (If you had a Bounceback, CBILS or RLS loan this should be in your paperwork)
• Ineligible businesses: The following are not eligible: Banks, Building Societies, Insurers and Reinsurers (excluding insurance brokers), Public sector bodies, State-funded primary and secondary schools. Plus, principle business activity of primary extraction of coal, lignite, crude petroleum and natural gas and certain support activities for petroleum and natural gas extraction.

Of course, if want to just confirm things with the British Business Bank, here’s the link to their page.

Headline Features:

• Launched on July 1st, 2024 and runs up to 31st March 2030.
• The scheme protects your principal private residence from being used as security but lenders may require a personal guarantee.
• Borrow from £10,000 for asset finance or £25,001 for term loans, up to £2 million in both instances or up to £1m in Northern Ireland.
• 70% govt-backed guarantee to the lender, the borrower remains 100% liable for the debt.
• Competitive fixed interest rates and flexible repayment terms up to 6 years.
• Funds can be used for any legitimate business purpose.
• Previous applicants of CBILS, Bounce Back Loans, or RLS can register an interest.

How to Access the Scheme?

Portman is both broker & lender for business finance, and can introduce you to accredited lenders for government backed finance. We discuss your needs, then source funding from across our panel of specialist lenders. For GGS specifically, we will approach lenders who’s portfolio includes the GGS product. If an offer of finance is made, it is then determined by that lender whether to offer the GGS or another product that they feel is more suitable for you.

In either instance, Portman can sort the bulk of the admin for you and will guide you through the process.

FAQ Category

• Government-backed Finance FAQs

Government-backed Finance FAQs

What is the repayment term for loans on the Growth Guarantee Scheme?

Repayment terms for loans obtained through the Growth Guarantee Scheme can extend up to 6 years, providing SMEs with flexibility in managing their repayments.

How long will the Growth Guarantee Scheme be available?

The Growth Guarantee Scheme is expected to be available from 1st July 2024 until 31st March 2030.

Who administers the Growth Guarantee Scheme?

The Growth Guarantee Scheme was announced in the Spring 2024 budget by the Conservative Chancellor Jeremy Hunt. It is administered by the British Business Bank and delivered through a panel of lending partners. Lenders who wish to participate in the scheme then need to be accredited by the British Business Bank. Lenders must adhere to the terms of the scheme but may add their own criteria when assessing a business’s suitability for this or other finance products. As part of your enquiry with Portman, we will look across our panel of lenders matching you with an appropriate funder based on your situation. Lenders whose portfolio includes GGS will make an assessment of suitability alongside their other products. Businesses do not need to use a broker to access the scheme, though doing so may provide a wider range of financial options. If a business takes a loan covered by the scheme, their relationship for the duration of the loan is primarily with the lender, but if a broker such as Portman were used, they will also keep in touch.