Growth Guarantee Scheme: government-backed business loans explained

What is the Growth Guarantee Scheme?

The Growth Guarantee Scheme is a UK government scheme that makes it easier for smaller businesses to borrow. It does not lend money itself. Instead, the British Business Bank, which runs the scheme for the Department for Business and Trade, gives accredited lenders a guarantee: if a facility made under the scheme is not repaid, the government covers 70% of the lender’s loss once the lender has tried to recover the money in the normal way.

That guarantee lowers the lender’s risk, so it can say yes to a business it would otherwise turn down, lend more than it otherwise would, or lend without the property security it would normally want. The money still comes from the lender, the lender still makes the decision and the business still owes every penny.

Where the scheme came from

The scheme is the latest in a line of government-backed lending that began during the pandemic. The Coronavirus Business Interruption Loan Scheme and Bounce Back Loans opened in 2020, the Recovery Loan Scheme followed in April 2021, and its third version ran from August 2022. The Growth Guarantee Scheme replaced it on 1 July 2024, keeping the 70% guarantee but with a focus on investment and growth rather than recovery. The 2025 Spending Review extended it to 31 March 2030.

Three things the scheme is not

• Not government money. There is no grant, no subsidised rate and no government application form. You borrow from an ordinary bank or finance company.
• Not protection for you. The guarantee pays the lender. It does not reduce what the company owes, and it does not cover a director’s personal guarantee.
• Not a product you can ask for. The lender decides whether a facility goes under the scheme. You can ask whether it would consider it, but you cannot insist.

The scheme is open to sole traders, partnerships and LLPs as well as companies. Our upcoming introduction service is limited to UK limited companies, so the examples in this guide assume a limited company borrowing for business purposes.

How the 70% guarantee works, step by step

From the outside, a scheme loan looks like any other business loan. The difference sits in an agreement between the lender and the British Business Bank, which only comes into play if things go wrong.

1. You apply to an accredited lender for a loan, overdraft, asset finance or invoice finance, in the normal way.
2. The lender assesses the business on its own criteria: affordability, credit history, trading record and security.
3. The lender decides to use the scheme, usually because the guarantee lets it lend where the security or the record would otherwise fall short.
4. You confirm you are eligible and sign a subsidy declaration, because the guarantee counts as a public subsidy. The lender tells you the subsidy value.
5. You repay as agreed, and the guarantee is never used. This is what happens to the great majority of scheme facilities.
6. If the business defaults, the lender demands repayment and recovers what it can, from any security, any personal guarantee and the company itself.
7. The lender claims on the guarantee for 70% of what remains unpaid. The lender bears the other 30%.

How much can you borrow, and for how long?

The scheme covers five types of facility. Each has its own minimum and its own maximum term, all within an overall limit of £2 million per business group. Borrowers within the scope of the Northern Ireland Protocol have a lower limit of £1 million.

The £2 million is a ceiling for the whole group, not for each company in it. Facilities a group already holds under the scheme count towards it, and some lenders also take account of what is still owed under earlier government-backed schemes, such as CBILS or the Recovery Loan Scheme. Ask the lender how much headroom you have.

The scheme limit is not what a lender will offer. Each lender still sizes the facility on what the business can afford and on its own product limits, so most facilities are far smaller than £2 million. Scheme facilities to 30 June 2026 averaged about £172,600. Our guide to how much a business can borrow shows how lenders work out an affordable amount from turnover and cash flow.

Term loans and overdrafts under £25,001 are outside the scheme. For smaller sums, look at an ordinary small business loan, or, for a founder in the first years of trading, a personal government Start Up Loan.

The July 2026 changes: what is new, and when

On 13 July 2026 the Treasury announced a large expansion of the scheme, and the British Business Bank published the detail alongside it. Three changes matter to borrowers.

• A higher turnover limit. The ceiling rises from £45 million to £54 million a year, bringing more mid-sized businesses into the scheme.
• Longer terms. The maximum term rises from six years to ten for loans of up to £1.1 million. The British Business Bank describes this as applying to term loans and asset finance. Overdrafts, invoice finance and asset-based lending stay at up to three years.
• More money behind it. A £6.5 billion uplift is meant to raise lending under the scheme from about £1.35 billion a year to £3.35 billion by 2028/29, and the number of businesses helped from about 8,000 a year to about 20,000.

The 70% guarantee and the £2 million limit are unchanged. The Treasury estimates that every £1 the government spends on the scheme supports about £10 of bank lending, and that small businesses’ demand for finance outstrips supply by £1.6 billion to £4.1 billion a year.

Are the changes live yet?

Not everywhere. The British Business Bank said in July that the scheme stays open on its existing terms while it works with accredited lenders to bring the changes in, and the GOV.UK scheme listing still showed the £45 million limit in October 2026. In practice, each lender is adopting the longer term and the higher limit on its own timetable. If either matters to your plans, ask the lender in writing whether it offers it today, before you apply.

The same package added £500 million of guarantee capacity for lending to businesses rich in intellectual property, more support for community development finance, and a new export guarantee scheme due in spring 2027. See other government-backed finance below.

Who is eligible for the Growth Guarantee Scheme?

There are two sets of tests: the scheme’s rules, which every accredited lender applies, and the lender’s own lending criteria, which differ from lender to lender. Passing the first does not mean you will pass the second.

The scheme’s rules

• Trading in the UK, including Northern Ireland.
• Turnover of £45 million or less, rising to £54 million as lenders adopt the July 2026 changes. Lenders look at the turnover of the whole group.
• More than half of turnover from trading activity, rather than from investments or rent, for example.
• A viable business with a credible plan to repay, judged by the lender.
• Not a business in difficulty, and not in insolvency proceedings or a formal arrangement with creditors.
• Within the subsidy limit. The guarantee counts as a public subsidy. See subsidy control below.
• Not an excluded type of organisation. Banks, building societies, insurers and reinsurers, public-sector bodies and state-funded schools cannot use the scheme.

GOV.UK lists the scheme as open to start-ups with one to two years of trading as well as established businesses, and to firms of every size from none to 249 employees, across all major sectors. Lenders often ask for more than the minimum, such as two years of filed accounts.

The lender’s own criteria

The guarantee covers 30% less than a full loss, so lenders still lend only where they expect to be repaid. Expect the usual checks: turnover, profit, cash flow, existing debt, the company’s and directors’ credit files, and the purpose of the money. Our guide on how to get a business loan sets out what lenders look for and the documents they ask for. If your company or a director has a CCJ or missed payments, our guide to bad credit business loans explains how lenders weigh them.

Subsidy control

Under the Subsidy Control Act 2022, the scheme is given as Minimal Financial Assistance. A business group can receive no more than £315,000 of this kind of subsidy across the current and previous two financial years. The subsidy value of a scheme facility is not the amount you borrow: it is a much smaller figure for the benefit of the guarantee, and the lender will tell you what it is. A business that has received large grants or other public support may find the limit gets in the way. Borrowers within the Northern Ireland Protocol fall under different subsidy rules.

What a Growth Guarantee Scheme loan costs

There is no Growth Guarantee Scheme interest rate. The government does not set, cap or subsidise the price. Each lender sets its own rate and fees for each business. The lender pays the British Business Bank a fee for the guarantee and usually builds it into the price, so you do not pay a separate charge to the government.

For the strongest applicants, a scheme loan can cost about the same as the lender’s normal lending. For businesses that only qualify because of the guarantee, it is often priced towards the top of the lender’s range. The point of the scheme is access to finance, not a discount.

These ranges are drawn from published lender and broker information for UK companies in October 2026. They are not quotes. For context, the Bank of England held Bank Rate at 3.75% on 17 September 2026, and its official figures put the average rate on new bank loans to small and medium-sized businesses at 6.63% in August 2026. Our guide to business loan interest rates explains how to put quotes on the same basis.

Personal guarantees and security under the scheme

The scheme has one firm rule on security and leaves the rest to the lender.

• Your main home is off limits. A lender cannot take a principal private residence as security for a scheme facility. That applies to a charge over the home and to a guarantee secured on it.
• Personal guarantees are allowed. Lenders can ask directors for personal guarantees in line with their normal lending practice. A guarantee is a personal promise to pay. It is not secured on your home under the scheme, but if it is called and you cannot pay, the lender can pursue you through the courts like any other creditor.
• Business security is allowed. A lender can take a debenture over the company’s assets, a charge over commercial property or the asset being financed.
• The guarantee does not cover you. When a lender claims on the government guarantee, it is usually expected to have pursued its security and any personal guarantees first.

Read a personal guarantee as carefully as the loan. Ask whether it is capped at a fixed amount or a share of the debt, whether it covers only this facility or all of the company’s borrowing, and whether it can be released once the loan is paid down. Our guide to personal guarantees explains the main terms, and our guide to secured vs unsecured business loans compares what is at risk on each route.

Worked example: a £400,000 expansion

This example follows a company from first enquiry to a scheme-backed offer. The figures are assumptions for the illustration, not a lender quote.

If the ten-year term were available on the working capital loan, the payment on the £160,000 would fall to about £2,159 a month, but the interest would rise to about £99,100. A five-year contract is usually best matched with borrowing repaid within about five years.

When the scheme helps, and when it does not

The guarantee changes a lender’s answer in some situations and makes no difference in others. Knowing which you are in saves applications.

A scheme facility is still debt. If the money is plugging losses rather than funding something that will earn or save more than it costs, borrowing more, even on good terms, can make the problem bigger. Our borrowing checklist covers five checks to make before taking on any business finance.

How to apply for a Growth Guarantee Scheme loan

You cannot apply to the government or the British Business Bank. Every application goes to an accredited lender, directly or through a broker.

1. Be clear on the purpose and the amount. What the money is for, how it will be repaid and the smallest amount that would do the job.
2. Check the scheme rules. Group turnover, the share from trading, any subsidies received in the last three financial years and any facilities already under the scheme.
3. Choose the right type of facility. A term loan for a one-off investment, an overdraft or invoice finance for cash flow, asset finance for equipment.
4. Find accredited lenders. The British Business Bank lists accredited lenders and the products each offers. They include high-street and challenger banks, specialist and online lenders, asset and invoice finance providers and some community development finance institutions.
5. Start with your own bank, if it is accredited. It already knows your account. Ask whether it would consider the facility under the scheme, and which terms it offers since the July 2026 changes.
6. Prepare your documents. Usually two years of filed accounts, current management accounts, six to twelve months of bank statements, a cash flow forecast, details of existing debt and a short plan for how the money will be used and repaid.
7. Apply and answer questions quickly. Ask whether the first check is a soft or hard credit search, and whose file it affects.
8. Read the offer and the subsidy declaration. Check the rate, every fee, the term, early repayment charges, security, covenants and personal guarantees, and the subsidy value the lender gives you.
9. Compare offers in pounds. The total repayable and the monthly payment over the same term, not the headline rate.

Simple facilities can complete in a couple of weeks. Larger or secured facilities, with a debenture, valuations and legal work, often take four to eight weeks. The scheme itself adds little time, because the lender approves the guarantee under delegated authority rather than sending each case to the government.

You never need to pay a fee upfront to get a government-backed loan. The Financial Conduct Authority warns that a request for a fee before money is released is a common sign of loan fee fraud. Check that the lender appears on the British Business Bank’s list, and contact it using the details there.

If a lender turns you down

A refusal from one accredited lender does not rule you out of the scheme, because each lender applies its own criteria. It is still worth finding out why before trying again.

• Ask for the reasons. Lenders will not always give detail, but most will say whether the issue was affordability, credit history, trading record or the amount.
• Ask for a referral. Under the Bank Referral Scheme, nine designated banks, including Barclays, HSBC, Lloyds, NatWest and Santander, must offer to pass your details to designated finance platforms when they decline a business with group turnover under £25 million. You must agree to the referral.
• Change the request, not just the lender. A smaller amount, a longer term, asset finance on the equipment rather than an unsecured loan, or invoice finance instead of an overdraft can turn a no into a yes.
• Fix what you can first. Late accounts, errors on credit files, arrears with HMRC and a bank account that keeps going overdrawn are common reasons for refusal. Each search on your file can count against the next application, so avoid applying everywhere at once.
• Consider community lenders. Community development finance institutions lend to viable businesses that banks decline, and some are accredited under the scheme. You can find a responsible finance provider through their trade body.

Our guide to getting a business loan covers what to do after a refusal in more detail.

How the scheme has been used: the numbers

The British Business Bank publishes quarterly performance data for the Growth Guarantee Scheme together with the last round of the Recovery Loan Scheme, which it replaced.

Two points stand out. Most scheme facilities are modest in size, so the scheme is not just for large borrowers. And claims on the guarantee are concentrated among smaller facilities, which fits the wider pattern that smaller and younger businesses are riskier to lend to, and the reason the scheme exists. The Treasury says £2.5 billion of the lending since 2022 went to businesses outside London and the South East.

Other government-backed finance for businesses

The Growth Guarantee Scheme is the largest government-backed route for established smaller businesses, but not the only one. These programmes suit different stages and needs.

Wales and Scotland also have their own public finance bodies, the Development Bank of Wales and the Scottish National Investment Bank. New businesses with no trading record will usually find the Start Up Loan more realistic than a scheme facility, and our guide to startup business loans compares every route by stage.

Scheme loan or ordinary finance?

A scheme facility is one way to fund a plan, not a separate kind of product. The same choice of finance applies with or without the guarantee, and sometimes the plain version is better.

• If you have good security, a loan secured against commercial property may be larger, longer and cheaper than a scheme facility. For buying premises, a commercial mortgage can run for 20 years or more.
• If the need is equipment, asset finance is secured on the asset itself and is often approved without the scheme. Our guide to how asset finance works compares hire purchase, leasing and a loan.
• If customers pay slowly, invoice finance grows with your sales. Our guide to how invoice finance works prices a year of factoring and discounting.
• If the gap is short-term, our guide to working capital finance compares overdrafts, revolving credit and short-term loans in pounds.
• If you want to borrow without property security, our guide to unsecured business loans sets out rates, limits and requirements with or without the scheme.

Whichever route you take, compare offers on the same amount and term, and look at the total repayable, every fee and the security asked for. Our guide to comparing business loans shows how.

Where Business Loan Advice fits

We are not a lender, we are not accredited under the Growth Guarantee Scheme, and we do not give personal advice. We are preparing a service that will introduce UK limited companies directly to lenders. No lenders are confirmed yet, so we cannot currently obtain quotes, say whether a lender would use the scheme or make introductions. You will not pay us a fee. If a lender pays us commission after the service launches, we will tell you before asking your permission to refer you. The service will not cover individuals, sole traders or partnerships.

In the meantime, the business loan calculator and these guides are free to use with no sign-up. If your limited company is planning to borrow, you can register its interest and we will contact you about the service launch. Read how we are paid for the details.

Common questions