Growth Guarantee Scheme

What Is The Growth Guarantee Scheme?

The Growth Guarantee Scheme is the direct successor to the Recovery Loan Scheme from the British Business Bank and is designed to support smaller UK businesses looking to invest and grow. The funding provides a series of accredited lenders, such as banks and financial institutes with a 70% government-backed guarantee on any money they lend out to businesses. The aim is for funding to be made available to businesses with a higher risk profile or a lower trading history that would normally be turned down for finance by traditional lenders without a guarantee in place. What the guarantee means for the lender is that if a business defaults on a loan and is unable to repay then the Government pays back 70% of it, therefore mitigating risk.

What Has The Scheme Replaced?

The scheme is operating as a direct replacement for the Recovery Loan Scheme from the British Business Bank, which ran from 6 April 2021 up until 30 June 2024. The aim of the original funding was to help businesses recover from the disruption caused by the Covid-19 pandemic and to help protect jobs. In the original round of the Recovery Loan Scheme, according to official statistics a total of £4.5bn was lent out via accredited lenders to around 20,000 businesses. The Recovery Loan Scheme was then extended to help businesses during periods of high inflation and high costs of doing business in an economic downturn period where consumers had less money to spend. There will be an additional update available from the British Business Bank in the coming months that will state the number of schemes supported overall by the Recovery Loan Scheme, but it is expected to include billions more pounds lent out to tens of thousands more businesses during the extension period.

What Type Of Funding Does The Growth Guarantee Scheme Back?

The Growth Guarantee Scheme can be applied by lenders to back a wide range of financial loan products, such as term loans, overdrafts, asset finance and invoice finance. A minimum of £1,000 can typically be made available through certain facilities up to £2 million for businesses in England, Wales and Scotland or £1m in Northern Ireland due to the Northern Ireland Protocol and EU State Aid rules. Funding can be for a period of up to 6 years, with the interest rates being variable and set by the lenders themselves.

What Can The Funding Pay For?

The Growth Guarantee Scheme can be used for any types of funding that a typical bank loan can be used for, which includes business growth purposes, working capital, job creation, investing in capital equipment or buildings and renovation activities. The only restriction set on the Growth Guarantee Scheme is that whilst exporters may apply for funding, it cannot be used to run advertising campaigns outside of the UK, manufacture products that are only for sale outside of the UK or for setting up overseas offices, employing overseas staff or setting up overseas distribution networks. It also cannot be used to fulfil a direct export order. The reasons for these restrictions is because the loans are primarily aimed at getting businesses to grow in the domestic UK market and benefit the UK economy rather than fund overseas activity.

Who Are Some Of The Providers?

An initial set of accredited lenders include Bank of Scotland, HSBC, Lloyds Bank, Natwest, Royal Bank of Scotland, Ulster Bank, FSE Group, Business Enterprise Loans, BCRS Business Loans, Close Brothers and Allica Bank. There is expected to be a range of additional lenders added once the scheme has been established for a period of time.

Who Can Apply For The Growth Guarantee Scheme?

Businesses or trading individuals may apply for finance if their annual turnover is less than £45 million, they have a valid and viable proposal for lending as deemed by the lender and are not considered to be in financial difficulty or at a high risk of insolvency.

How Long Is The Scheme Running For?

The British Business Bank plans to run the Growth Guarantee Scheme from 1st July 2024 to 31st March 2026. As with the former Recovery Loan Scheme, there may be plans beyond that point to extend the scheme or replace it with another similar scheme, this will all depend on the funding available from the Government at that point in time.

How To Apply For The Growth Guarantee Scheme?

Businesses interested in applying for funding backed by the Growth Guarantee Scheme can select from the list of accredited lenders on the British Business Bank website and then choose a specific loan product type from the bank or financial lender in question and read the terms and conditions and get in touch with their business lending team to discuss specific needs and start the application process.

Find Out More About The Growth Guarantee Scheme

Businesses can also access a filtered list of Growth Guarantee Scheme backed loan products from accredited lenders and save time based on their needs. To find out a full and regularly updated list of the current Growth Guarantee Schemes available for UK businesses to apply for, visit https://getbusinessgrants.com/ for details.