A government-backed guarantee makes lenders more willing to lend - but you stay liable for the full debt. Here's how the scheme works and when it's the right tool.
When businesses need funding to grow - equipment, working capital, an acquisition - the Government Growth Guarantee Scheme is worth knowing about.
Administered through the British Business Bank, the scheme provides a 70% government guarantee to participating lenders. That guarantee is to the lender, not to you - you remain fully liable for 100% of the debt. What it does is make lenders more willing to lend, and in some cases on better terms.
UK-based businesses with turnover up to £45 million, not in financial difficulty at the time of application. Term loans and overdrafts run from £2,000 to £2 million; asset finance and invoice finance from £1,000 to £1 million. Terms run from six months to six years.
You still need to pass the lender's credit assessment - the guarantee doesn't mean automatic approval. Compare rates across accredited lenders rather than defaulting to your existing bank; rates are set by individual lenders, not the government. For larger facilities, expect to be asked for a personal guarantee alongside the scheme guarantee.
Use this for a clear, specific purpose - a growth investment, equipment, or bridging a working capital gap ahead of a contract. It's not the right tool for covering an ongoing cashflow shortfall; address the underlying problem first.
Apply through an accredited lender directly, not through the government. Check the British Business Bank website for the full list, which includes challenger banks and alternative lenders alongside the high street banks.
Scheme availability and terms change - verify current details before applying.
If you need help assessing whether this type of facility suits your business, or preparing the financial information a lender will ask for, get in touch.
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