The Government has announced a significant expansion of the British Business Bank’s Growth Guarantee Scheme. This provides greater access to finance for small and medium-sized businesses across the UK.
Announced by Chancellor Rachel Reeves, the changes are designed to make it easier for SMEs to secure funding by increasing the amount of lending available and broadening the eligibility criteria.
What is the Growth Guarantee Scheme?
The Growth Guarantee Scheme helps lenders provide finance to smaller businesses by offering a 70% government-backed guarantee on eligible commercial loans of up to £2 million. This reduces the risk for lenders, making it easier for businesses to access funding that may otherwise be difficult to obtain.
The scheme supports a range of finance options, including:
– term loans
– overdrafts
– asset finance
– invoice finance
This helps businesses invest, expand and manage cash flow.
What’s changing?
The latest announcement includes several key enhancements to the scheme:
- An additional £2 billion of SME lending will be made available each year by 2028/29.
- Total annual lending supported by the scheme will increase from £1.35 billion to £3.35 billion.
- The maximum loan term for facilities of up to £1.1 million will increase from six years to ten years, giving businesses greater flexibility when repaying finance.
- The annual turnover threshold for eligible businesses will rise from £45 million to £54 million, allowing more growing businesses to qualify for support.
More businesses set to benefit
The British Business Bank estimates that these changes will enable around 20,000 businesses to benefit from the scheme each year by 2028/29. This represents an increase of approximately 12,000 additional businesses annually compared with current levels of support.
Since its launch in 2022, the Growth Guarantee Scheme has already delivered more than £3.7 billion in finance to UK SMEs, with around £2.5 billion of that funding supporting businesses outside London and the South East.
The Government also estimates that every £1 invested in the scheme helps generate around £10 of lending through participating banks and finance providers.
What does this mean for your business?
For businesses looking to invest in growth, purchase equipment, recruit staff or improve cash flow, the expanded Growth Guarantee Scheme could make accessing finance more achievable.
With increased lending capacity, longer repayment terms and wider eligibility, more businesses may be able to secure the funding they need to support their next stage of growth.
