What Is the Business Growth Guarantee Scheme?
2 Oct 2026 · Unlocked · 13 min read
The business growth guarantee scheme is a government small business funding scheme that can turn a lender's no into a yes, because the government covers 70% of the lender's loss if the facility fails (British Business Bank, Growth Guarantee Scheme page, checked 19 October 2026). It is a business loan guarantee scheme, so the promise is made to the lender and the company still owes every pound it borrows. The guaranteed business loans UK lenders offer under it are also on terms that are mid-change: the Chancellor announced longer loans and a higher turnover limit on 12 July 2026, and the British Business Bank still lists the existing terms as the ones in force.
It is one route within the wider range of business funding open to a UK small company, delivered through around 50 accredited lenders (British Business Bank press release, 13 April 2025).
The Business Growth Guarantee Scheme in Brief
The Growth Guarantee Scheme (GGS) is a business guarantee scheme that succeeded the Recovery Loan Scheme and launched with accredited lenders on 1 July 2024 (British Business Bank, Growth Guarantee Scheme page, checked 19 October 2026). The British Business Bank administers it on behalf of the Secretary of State for Business and Trade. The main facts, from that page as checked on 19 October 2026:
- Guarantee: 70% to the lender; the borrower remains 100% liable for the debt.
- Facility size: generally up to £2m per business group, or £1m for borrowers in scope of the Northern Ireland Protocol.
- Turnover limit: up to £45m on a group basis, with £54m announced on 12 July 2026.
- Applying: through an accredited lender only.
The money is a loan or other facility, repaid with interest; grant routes such as Innovate UK grant competitions and who qualifies run on separate rules. GGS finance can go to any legitimate business purpose, provided the company can afford the extra debt (British Business Bank, checked 19 October 2026). The bank is also piloting Green GGS for businesses investing in sustainable assets.
How the Government Guarantee Changes What a Lender Offers
A lender approves and prices a loan on what it expects to lose if the borrower fails. Under the business loan guarantee scheme, the government guarantees 70% of the outstanding balance after the lender has completed its normal recovery process (British Business Bank, checked 19 October 2026). The bank says this lets lenders provide debt finance "to more viable SMEs that they wouldn't otherwise consider".
An illustrative default, with £100,000 still owed after the lender's normal recovery process:
- Guarantee paid to the lender: £100,000 × 70% = £70,000
- Loss the lender carries itself: £100,000 − £70,000 = £30,000
- Debt the company remains liable for: £100,000
The lender's exposure falls from £100,000 to £30,000, which is what lets it approve a company it would otherwise decline. Its pricing takes account of the guarantee and the fee the lender pays for it, and where it can offer a commercial loan on better terms, it will (British Business Bank, checked 19 October 2026).
Lenders can take personal guarantees at their discretion, but a Principal Private Residence (the director's main home) cannot be taken as security within the scheme (British Business Bank, checked 19 October 2026). Before agreeing to one, a borrower should be clear on what signing a personal guarantee commits a director to.
Who Is Eligible: Turnover, Trading and the Viability Test
The British Business Bank's scheme page (checked 19 October 2026) and GOV.UK's summary page (published 29 June 2026) set out the same four tests for this government small business funding scheme:
| Test | What the company must show |
|---|---|
| Turnover | No more than £45m, on a group basis where the company is part of a group |
| UK trading | Trading activity in the UK, with more than 50% of income from trading activity (charities and further education colleges are exempt from the 50% test) |
| Viability | The lender considers the business proposition viable |
| Not in difficulty | Not a business in difficulty, including not being in relevant insolvency proceedings |
The viability test is the lender's own judgement, made alongside its standard credit and fraud checks. The figures a credit team reads first are covered in what lenders see on your Companies House filings.
The scheme also has a subsidy condition. GGS assistance counts as a subsidy, a borrower and its wider group can receive only a limited amount over any rolling three-year period, and earlier subsidy can reduce what the company may borrow (British Business Bank, checked 19 October 2026). The borrower confirms in writing that the facility keeps it within the limit; the lender supplies the subsidy value, which differs from the amount borrowed (GGS subsidies page, checked 19 October 2026).
How Much You Can Borrow: Sizes, Products and Terms
The scheme supports five products, though not every lender offers all of them. Sizes and terms from the British Business Bank's scheme page, checked 19 October 2026:
| Product | Minimum facility | Maximum facility | Term |
|---|---|---|---|
| Term loan | £25,001 | £2m per business group | 3 months to 6 years |
| Overdraft | £25,001 | £2m per business group | 3 months to 3 years |
| Asset finance | £1,000 | £2m per business group | 3 months to 6 years |
| Invoice finance | £1,000 | £2m per business group | 3 months to 3 years |
| Asset-based lending | £1,000 | £2m per business group | 3 months to 3 years |
Northern Ireland Protocol borrowers can borrow up to £1m, less in agriculture and fisheries or aquaculture. A business with a CBILS, CLBILS, Bounce Back or Recovery Loan Scheme facility taken out before 30 June 2024 can still apply for guaranteed business loans UK-wide under GGS, though that borrowing may reduce its maximum (British Business Bank, checked 19 October 2026). The £2m is a ceiling; the amount offered depends on what the company can afford to repay.
Can a Business with a Weak Credit History Get a Guaranteed Loan?
A weak credit history does not rule a company out, but the guarantee does not replace the lender's assessment: lenders must run their standard credit and fraud checks on every applicant, and the decision is theirs (British Business Bank, checked 19 October 2026). A poor credit file counts as it would for any commercial loan.
For directors weighing small business funding bad credit options, the hard exclusion is a business in difficulty, including one in relevant insolvency proceedings. A company with a poor earlier year and viable trading now is the case the guarantee suits, because the lender carries 30% of the loss on the outstanding balance instead of all of it.
What Changed in 2024 and 2025: The Scheme So Far
GGS replaced the Recovery Loan Scheme, which ran from 6 April 2021 until June 2024, and opened with accredited lenders on 1 July 2024 (British Business Bank, scheme and subsidies pages, checked 19 October 2026). The 70% guarantee, the £2m ceiling and the £45m turnover limit it launched with still apply.
On 13 April 2025 the British Business Bank added capacity for around £500m of extra lending, aimed at smaller businesses with cash flow problems from changes in global tariffs, and reported £2.1bn of finance through 13,447 facilities as at 31 December 2024 (British Business Bank press release, 13 April 2025). As business growth funding the scheme has grown since: GOV.UK's announcement of 13 July 2026 puts the total at over £3.7bn of financing to UK SMEs, £2.5bn of it outside London and the South East.
The July 2026 Expansion: What Is Announced and What Applies Now
On 12 July 2026 the Chancellor announced a further £6.5bn of market lending through the scheme over four years, estimated to help 33,000 businesses (British Business Bank, scheme page, checked 19 October 2026). GOV.UK's press release of 13 July 2026 gives the government's own figures, here against the terms in force:
| Term | Applies now (British Business Bank, checked 19 October 2026) | Announced (GOV.UK, 13 July 2026) |
|---|---|---|
| Turnover limit | £45m | £54m |
| Longest term loan or asset finance facility | 6 years | 10 years, for loans of up to £1.1m |
| SME lending supported per year | £1.35bn | £3.35bn by 2028/29 |
| Businesses supported per year | 8,000 | 20,000 by 2028/29 |
GOV.UK also estimates that every £1 spent on the scheme supports around £10 of bank lending (GOV.UK, 13 July 2026). Whether a borrower gets the new terms of this small business funding scheme depends on its lender. The British Business Bank says it is putting the changes into operation with lenders "over the coming weeks" and that the scheme "remains fully operational under the existing terms", and its page still said both on 19 October 2026.
A group with £48m of turnover fails the current test by £48m − £45m = £3m, and would have £54m − £48m = £6m of headroom under the announced limit. That company, and any borrower wanting a term longer than six years, should ask the lender in writing which terms apply before signing.
How to Apply: Accredited Lenders and What to Prepare
On how to apply for small business funding under this government small business funding scheme, the route is fixed: applications go to an accredited lender, never to the government, and the British Business Bank publishes the lender list on its scheme page (GOV.UK, published 29 June 2026, points to the same list). Before the first conversation, a company should have:
- Group turnover for the latest year, against the £45m limit.
- Trading income share, showing more than 50% comes from trading activity.
- The product and amount it wants.
- Its subsidy record for the three-year period, with paperwork stating each subsidy's value, since the borrower must declare relevant subsidies (GGS subsidies page, checked 19 October 2026).
- Earlier CBILS, Bounce Back or Recovery Loan Scheme borrowing.
The lender will also ask two short questions on whether the business is in scope of the Northern Ireland Protocol.
Frequently Asked Questions
Next Step: Work Out Your Borrowing Capacity
The business growth guarantee scheme is one route among grants, loans and other borrowing, and Business Grants vs Business Loans: Which Should You Apply For? weighs the first two against each other. Before approaching an accredited lender, run the company's figures through the borrowing capacity calculator, a business growth funding tool that estimates how much the company could borrow, and see the other routes on the business funding page.
