🎧Unlocking growth: A guide to the UK’s Growth Guarantee Scheme for SMEs

The Growth Guarantee Scheme (GGS) was launched in July 2024 as a way for small businesses to more easily secure investment. The aim is to unlock growth potential with finance for equipment, new products, sustainability projects, and working capital, helping businesses to plan confidently for the future.
In this Q&A, Close Brothers takes a closer look at how it works, eligibility and other aspects of the scheme.

Q1: What is the GGS?
The GGS is a UK Government-backed initiative launched as the successor to the Recovery Loan Scheme. It aims to help small and medium-sized businesses (SMEs) access finance for growth, investment, and cash flow management. The scheme has been extended to 31st March 2030 and is administered by the British Business Bank through accredited lenders.

Q2: How does the scheme work?
l Government Guarantee: Lenders receive a 70% government-backed guarantee on eligible loans, reducing their risk and encouraging lending
l Borrower Liability: Businesses remain 100% liable for repayment
l Products Covered: Term loans, overdrafts, asset finance, invoice finance, and asset-based lending
l Facility Size: Up to £2 million per business group (or £1 million for businesses under the Northern Ireland Protocol)
l Term Lengths: Typically three months to six years, depending on the product

Q3: Who is eligible?
To qualify, businesses must:
l Be UK-based and actively trading
l Have a turnover of up to £45 million
l Demonstrate financial viability and not be in insolvency or financial distress
l Use funds for a legitimate business purpose (e.g., investment, working capital)
l Comply with subsidy limits (especially for Northern Ireland and certain sectors like agriculture)

Q4: What are the key benefits for SMEs?
l Improved access to finance: Easier approval due to reduced lender risk
l Flexible options: Loans, overdrafts, asset finance, and invoice finance
l Supports growth: Enables investment in equipment, expansion, and sustainability projects
l Continuity and confidence: Helps businesses plan long-term with government-backed security

Q5: Are there any limitations or considerations?
l It is not a grant: GGS is a loan scheme; businesses must repay in full
l Interest rates: May be higher than standard commercial loans, reflecting the guarantee structure
l Personal guarantees: Allowed at lender discretion, but principal private residences cannot be taken as security
l Better terms possible: If lenders can offer a commercial loan on better terms, they will do so instead of using GGS

Q6: How do businesses apply?
l Apply through accredited lenders listed on the British Business Bank website
l Provide a business plan, financial statements, and meet lender credit checks

Q7: What sectors benefit most?
While open to most SMEs, GGS is particularly useful for:
l Capital-intensive industries (e.g., manufacturing, brewing, distilling)
l Businesses needing equipment upgrades, sustainability improvements, or working capital for seasonal peaks

Quick facts recap
– Launch: July 2024
– End Date: March 2030
– Guarantee: 70% to the lender
– Max Facility: £2m (£1m NI)
– Eligibility: UK SMEs, turnover less than £45m
– Purpose: Growth, investment, cash flow
– Administered by: British Business Bank
For more information on the scheme or to find out if it can work for your business, get in touch with Close Brothers by visiting closeassetfinance.co.uk/enquiry
The availability of lending, products and services is subject to eligibility, status and our lending criteria. The right to decline any application is reserved; terms and conditions apply.