What is the Growth Guarantee Scheme?
Growth Guarantee Scheme
The Growth Guarantee Scheme (GGS) is an initiative supported by the government designed to help small businesses in the UK access the finance they need to grow, invest, and improve their financial position. Launched on 1st July 2024, this scheme acts as a successor to the now-closed Recovery Loans Scheme (RLS).
How does the Growth Guarantee Scheme work?
The GGS allows businesses to borrow up to £2 million, with the government covering up to 70% of the loan amount. This provides significant security to lenders, increasing their willingness to offer funding to businesses that may not meet traditional lending criteria. The scheme runs until 31st March 2026, offering an essential financial lifeline to UK businesses as they recover and expand.
What types of finance can I take out with the Growth Guarantee Scheme?
Under the Growth Guarantee Scheme, businesses can access various forms of finance tailored to their specific needs. The available finance options include:
Unsecured business loans – This method of finance is appealing to businesses who may be asset-light or may not want to use assets on their balance sheet as collateral. Loans are approved through the borrower’s creditworthiness.
Invoice finance – If your business is looking to unlock cash from unpaid invoices, invoice finance allows you to borrow against these outstanding amounts, giving you immediate access to funds.
Asset finance – This type of finance allows businesses to purchase or lease assets such as equipment, vehicles, or machinery. Asset finance is often a go-to option for companies looking to improve their operations or expand their capabilities.
Asset-based lending – A form of finance that uses the assets on your balance sheet as security against lending, providing capital to businesses to fund growth and new investments.
If your business has already taken advantage of government-backed schemes like the Bounce Back Loan (BBL), the Coronavirus Business Interruption Loan Scheme (CBILS), or the previous Recovery Loan Scheme (RLS), you are still eligible for the GGS. However, any remaining balances on previous loans will be considered when determining the amount you can borrow through the scheme.
How much funding can a business access through the Growth Guarantee Scheme?
Through the Growth Guarantee Scheme, businesses can borrow up to £2 million, with finance facilities including business loans, invoice finance, asset finance and asset-based lending available through the scheme. However, the minimum amount able to be borrowed through the scheme does vary.
With the Growth Guarantee Scheme, the lending amount range is:
- £25,001 - £2 million for unsecured business loans and secured business loans
- £1,000 - £2 million for invoice finance, asset finance and asset-based lending
What businesses are eligible for the Growth Guarantee Scheme?
To qualify for the scheme, businesses must meet the following criteria:
- Maximum Turnover – Your business must have an annual turnover of less than £45 million. If you operate as part of a group, this turnover threshold applies to the total turnover of the group.
- UK-Based Operations – The business must be based in the UK, and at least 50% of its income should be generated from activities carried out within the UK.
- Viability – The business must be considered viable, meaning it has the potential to continue operating and generating profits for the foreseeable future.
- Not in Financial Difficulty – To be eligible for funding, your business must not be in difficulty, which includes being in collective insolvency proceedings or at risk of failing to meet its obligations.
- Subsidy Limits – The funds borrowed through the GGS are classified as subsidies, so businesses must ensure they do not exceed the total subsidy limits that are set by the government.
In addition to these criteria, lenders will carry out their own credit assessments and may require additional documentation, such as recent financial accounts or business forecasts, to determine whether the business is eligible.
The GGS is a valuable resource for businesses looking to secure financial backing in challenging times, particularly those that may have struggled to access traditional finance options. If you meet the eligibility requirements, this scheme could be the right choice to fuel your business’s growth and success.
Why use a finance broker?
Navigating the finance market can be time-consuming and complex. That’s where a finance broker can be of significant value, as when you apply for business lending, we can identify competitive financial solutions, whether you are a small business or an established one, allowing you to continue with your day-to-day operations.
MAF Finance Group work with a wide selection of banks and alternative funders to ensure you can get a business loan that works for you.
Applying for the Growth Guarantee Scheme
MAF Finance Group can compare finance offerings from a wide range of funders to find the option best suited to your business.
If you would like to get a quote or need additional information, simply fill in the form and we will contact you. If you want to speak to someone directly, you can call us on 0115 958 6872 and a member of our team will be happy to speak to you. Alternatively, email us at [email protected].
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