The Growth Guarantee Scheme, often abbreviated to the GGS, is a UK government-backed program designed to help UK SMEs access funding.
SMEs often have difficulty scaling or investing in innovation within the business, so the Growth Guarantee Scheme is designed to boost businesses in the UK and bridge this existing gap. With 5.51 million SMEs in the UK, this scheme has been put in place to give a helping hand to all the small businesses currently active and looking to expand.
The scheme was launched in July 2024 and was introduced to replace the Recovery Loan Scheme, which was a scheme put in place to help businesses recover from the Covid-19 pandemic. The scheme has been rebranded and also extended to offer further support for SMEs.
In this article, we will be outlining what the Growth Guarantee Scheme is, how it works, and the eligibility criteria that you need in order to join the scheme, as well as the wider implications for the UK economy.
How does the Growth Guarantee Scheme work?
The Growth Guarantee Scheme is run by the British Business Bank, which is a development bank owned by the UK government. The scheme is also backed financially by the Secretary of State for Business, Energy & Industrial Strategy.
The Growth Guarantee Scheme has a range of products supported by different lenders, such as:
- Term loans
- Overdrafts
- Asset finance
- Invoice finance
- Asset-based lending
The benefit of the Growth Guarantee Scheme from a lender’s perspective is that they have a 70% government-backed guarantee, so they can be assured that most of their loan will be returned.
From a borrower’s perspective, it provides quick access to reliable loans. The scheme can support loans of up to £2 million, and a minimum amount of £1,000 in some cases.
Who is eligible for the GGS scheme?
You must meet certain eligibility criteria to get a loan from the scheme.
In order to get a loan from the Growth Guarantee Scheme, you must:
- Have a business based in the UK
- Have been trading in the UK for at least two years
- Be a limited company
- Have an annual turnover of less than £45,000,000, or forecast to be less than this
- Not be a business in difficulty or insolvency proceedings
- Require the funding for six years or less
- Generate more than 50% of turnover from trading activity
There are other criteria that you must meet, for example, the lender must consider that the borrower has a viable business proposition – essentially you must also meet the lender’s own criteria to obtain a loan.
There are some businesses which by default are not eligible:
- Banks & building societies
- Insurers & reinsurers
- Public sector businesses, such as state-funded primary and secondary schools
This is to ensure that the right businesses receive the help that they need and that the scheme is reserved for small, private businesses looking for financial support.
Benefits of the Growth Guarantee Scheme
As stated earlier, the Growth Guarantee Scheme has a range of financial products, from a variety of lenders. The maximum amount that you can borrow is £2 million, and the minimum amount that you can borrow is £1,000, which is via asset or invoice finance.
Risk mitigation
The aim of the scheme is to reduce financial risk for the lenders to encourage more lending practices. Although the borrower is still 100% liable for the loan, if the borrower’s business goes under, then the UK government will reimburse 70% of the loan, so the lender can be assured of the security of the loan.
Lenders will also be required to carry out their normal KYC and AML checks, adding another level of security for SMEs looking for funding.
Access to loans
The Growth Guarantee Scheme benefits SMEs by giving them a clear choice of lending options to choose from, and assurance that the lenders are legitimate, as they have been approved by the UK government. Whatever the requirement, the scheme will have a product in place to help.
How do I apply for the Growth Guarantee Scheme?
Applying to the Growth Guarantee Scheme can be done by going to the British Business Bank’s website and then going to the list of accredited lenders.
You can also apply for a loan directly through Rise Funding, and we will provide access to these lenders and find financing that is right for you.
Once you select the lender that you would like to go with, you will be taken to the lender’s specific page, and make an application through their processes.
When applying, you will need to have to hand:
- Management accounts
- Business plans
- Historic accounts
- Details of assets
- Details of previous subsidy awards
This is to provide evidence that you can afford to repay the loan, and that you are running a sustainable business that is less likely to run into financial difficulties.
You can get business guidance directly from the Britsh Business Bank’s website.
Conclusion
The Growth Guarantee Scheme was put in place to encourage the growth of SMEs in the UK.
As of November 2024, the scheme has facilitated more than £250 million in loans, with around 66% of the funds being allocated to businesses outside of London and the South East.
The scheme is serving as a catalyst for innovation, encouraging development and infrastructure growth across the UK. The collaboration between government and private entities, particularly small ones, shows the UK government’s commitment to creating shared economic development – and also an understanding of the importance of SMEs in the UK.
The wider economic benefit is huge too. By strengthening SMEs, this will in turn create jobs, develop other areas of the UK, and also make the UK a more attractive country for investors.
If you’re looking for a business finance quote, but are unsure where to go, then you can get a quote via our website. We offer access to all types of lender and also equip you with the knowledge to understand which finance product is right for you.
This quote will not affect your credit score and you can receive funding in as little as 24 hours.
