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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, officially launches July 1st, but is essentially an extension to, and rebranding of, the Recovery Loan Scheme (RLS) – available until 30th June 2024, which in turn replaced previous initiatives like CBILS and Bounce Back Loans.

Saul Michelson

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. This guarantee provides added security to lenders, aiming to increase loan availability for SMEs, expected to benefit over 11,000 businesses by March 2026.

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

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.

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

The Growth Guarantee Scheme heralds promising prospects for small and medium-sized enterprises (SMEs) across the UK, offering a host of anticipated benefits to facilitate their growth and sustainability.

Facilitation of growth initiatives

With easier access to finance, SMEs can confidently embark on growth initiatives. Whether investing in new equipment, expanding their product lines, or entering new markets, the Growth Guarantee Scheme provides the financial support needed to turn ambitious plans into reality. The scheme contributes to job creation, economic development, and overall prosperity by facilitating growth initiatives.

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. This reduced risk enables SMEs to access funding at competitive rates and favourable terms without needing significant collateral or credit history. By minimising risk, the scheme fosters a conducive environment for SME growth and innovation. In turn, the reduced risk to borrowers whereby a principal private residence cannot be taken as security, may encourage businesses to embark on new ventures.

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: Who Qualifies for GGS?

To qualify for the Growth Guarantee Scheme, SMEs must meet certain criteria outlined by the government. Eligibility requirements include:

  • Trading in the UK: SMEs must operate and conduct business within the United Kingdom.
  • Turnover Threshold: Businesses must have an annual turnover of up to £45 million.
  • Source of Turnover: More than 50% of the turnover must come from trading activities.
  • Insolvency Proceedings: SMEs currently involved in insolvency proceedings are not eligible for the scheme.
  • Exclusions: The scheme is not open to banks, insurers, public sector bodies, state-funded schools, or individuals (excluding sole traders or partners acting on behalf of a partnership).

Headline Features of the Growth Guarantee Scheme

Portman Finance Group, a leading government-backed finance broker, can help businesses find suitable lenders and navigate the application process.

  • The scheme protects your principal private residence from being used as security.
  • Borrow from £10,000 for asset finance or £25,001 for term loans, up to £2 million in both instances.
  • 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 apply.
  • Access to multiple lenders for a range of options and finance packages tailored to you.

How to Access the Scheme?

The Growth Guarantee Scheme launches on July 1st, 2024. Businesses meeting the eligibility criteria should approach Portman who, as an independent broker, can access multiple sources of finance to find the best option for your business including securing loans under this new scheme.

  • Do your research – Check the eligibility criteria, or let us help you find funding that suits your situation.
  • Contact us – We will have a chat about your business, collect documents and kickstart the right application.
  • Submit application – We’ll do the admin for you.
  • Assessment and approval – Lenders will assess your suitability for the GGS or other alternative available funding.
  • Release of funds – Use the cash to buy equipment, expand, invest or boost working capital.
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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.

I previously had an RLS / BBL / CBILS loan, can I apply for the growth scheme?

Yes, businesses that have previously received support through schemes such as the Recovery Loan Scheme (RLS), Coronavirus Business Interruption Loan Scheme (CBILS), or Bounce Back Loan Scheme (BBLS) may still be eligible to apply for the Growth Guarantee Scheme.

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 2026, providing SMEs with an extended period to access finance and support their growth initiatives.

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. 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. Brokers can then work with one or more lenders in order to introduce their customers to the scheme and provide options they feel are most appropriate for their customers. Businesses do not ned 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 through 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 likely also keep in touch.

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