Announced by the Chancellor this week, the Growth Guarantee Scheme will provide approximately £500m of additional lending capacity to help more smaller businesses across the UK. The extra funding is aimed at smaller businesses that may need support with cashflow issues due to changes in global tariff rates.
Delivered by the British Business Bank through around 50 accredited lenders, the Growth Guarantee Scheme has so far enabled £2.1bn of finance through 13,447 facilities.
The Growth Guarantee Scheme can generally support facility sizes of up to £2m and provides the lender with a 70% government-backed guarantee, helping lenders to support viable smaller businesses. The additional capacity is being provided to support around £500m of extra lending, targeted toward smaller UK businesses affected by the changes to global tariff rates.
Businesses can use the finance for any legitimate business purpose, including managing cashflow or working capital requirements due to disruption caused by changes to global tariffs. However, businesses must be able to afford to take out additional debt finance for these purposes.
Scheme features
The Growth Guarantee Scheme aims to improve the terms on offer to borrowers. If a lender can offer a commercial facility on better terms, they will do so.
Key features include:
- Up to £2m per business group: The maximum amount of a facility provided under the scheme is generally £2m per business group for borrowers outside the scope of the Northern Ireland Protocol, and up to £1m per business group for Northern Ireland Protocol borrowers.
- Wide range of products: The Growth Guarantee Scheme supports a broad range of finance solutions. The additional capacity for the scheme is intended to support term loans, overdrafts and other products that help support cashflow challenges. Not all lenders will be able to offer all products.
- Pricing: Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal. The lender’s pricing will take into account the benefit of the Government guarantee and a fee that is charged to the lender for the guarantee
- Guarantee is to the lender: The scheme 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
- Decision-making delegated to the lender: Growth Guarantee Scheme -backed facilities are provided at the discretion of the lender. Lenders are required to undertake their standard credit and fraud checks for all applicants.
How to apply
The Growth Guarantee Scheme is available through the British Business Bank’s accredited lenders and partners, which are listed on the British Business Bank website.
In the first instance, businesses should approach their own provider – ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.
Reinald de Monchy, Co-Chief Banking Officer, British Business Bank, said: “The Growth Guarantee Scheme and its predecessors have proven themselves to be an important means of supporting smaller UK businesses over the last forty years. The Growth Guarantee Scheme can be used counter-cyclically, enabling smaller businesses to obtain funding during times of uncertainty such as we are experiencing currently. It is therefore important and necessary to see additional capacity made available to support smaller UK businesses at this time.”
At Autumn Budget 2024, the government confirmed over £1bn of funding for the British Business Bank to continue its programmes throughout 2025/26, supporting access to finance for smaller UK businesses, and helping to drive economic growth across the UK. This included additional support for smaller housebuilders through the ENABLE Build programme, allocated funding for the Growth Guarantee Scheme, funding for Start Up Loans, additional funding for three equity programmes supporting innovative, high growth businesses including tailored support for companies in life sciences.
