Growth Guarantee Scheme: empowering businesses to scale confidently
With 5.51 million small businesses operating across the UK (and SMEs making up over 99% of all UK enterprises), it stands to reason that the government would actively want to support SMEs and continue to facilitate their significant contribution to the British economy.
One exciting programme designed to achieve just this is the Growth Guarantee Scheme, launched on 1 July 2024. Here’s what it is, how to find out if you’re eligible, and how to apply.
What is the Growth Guarantee Scheme?
Replaces the Recovery Loan Scheme
The government backed Growth Guarantee Scheme replaces the Recovery Loan Scheme (which in turn replaced the Bounce Back Loan Scheme) with the same loan terms as the Recovery Loan Scheme. The Growth Guarantee Scheme will run from its 1 July launch until 31 March 2026 and is estimated to help 11,000 businesses borrow up to £2M.
Support the growth of British SMEs
This rebrand from the Recovery Loan Scheme to the Growth Guarantee Scheme demonstrates a commitment from the government to support the growth of British SMEs, given in the first instance the focus was on recovery and here the branding is centred around growth.
Covers 70% of the loan amount
The government guarantee covers 70% of the loan amount, providing more security for lenders and a stronger incentive to extend credit to eligible businesses. The original iteration of this scheme started as a response to the difficulties many businesses faced as a result of Covid 19.
Support pivotal business expenses
This scheme can be used to support pivotal business expenses, including equipment purchases, marketing campaign funding, and payroll. The scheme is launched in the hopes that businesses will have easier access to essential funding and vital support to facilitate growth thereby boosting the economy. There is also the hope that this scheme will enable reduced interest rates given the guarantee helps limit some of the exposure for lenders.
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Is my business eligible?
Turnover below £45 million
This scheme is targeted towards small businesses and as such, you must have a turnover of below £45 million. The last iteration (the Recovery Loan Scheme) predominantly supported businesses with fewer than 50 employees. Limited companies, sole traders, limited liability partnerships, and cooperative societies who have been trading for longer than two years are all eligible.
Banks are not eligible
Banks, public sector companies, and businesses currently undergoing insolvency proceedings are not eligible. Additionally, businesses who gain more than 50% of their revenue from rentals or other non-trading activities are also ineligible.
Up to £2 million
Eligible funding solutions are offered for up to £2 million and businesses must be UK based and have a suitable business plan. If you meet these criteria, you can apply even if you have previously been awarded support through the Recovery Loan Scheme or Bounce Back Loan Scheme.
Learn more about the Growth Guarantee Scheme
What can I use this funding for?
This scheme is designed to support business growth and can be used for business related purchases and fees, including but not limited to:
Onboarding new employees
Expanding operations
Pursuing avenues for greater growth
Investing in new tech or equipment, including non-physical assets such as software products
Sales and marketing materials, both the creation and distribution
Upgrading your existing infrastructure
Expanding or improving your business premises
Covering day-to-day expenses
Paying suppliers
Purchasing stock and inventory
Testing and developing new products to launch
Basically, it’s any activity that facilitates your business growth. If in doubt, speak to your broker or lender to find out if you can use this funding for what you have in mind.
Just remember– you’re 100% liable for the debt you take out.
What if I’m not eligible?
That’s completely okay, not all businesses are eligible. Maybe you don’t pass credit checks or maybe your turnover surpasses £45 million. There is still help at hand.
At Funding Options by Tide, we work to match borrowers to suitable lenders. Get in touch with us to find funding solutions for:
Secured business loans: Do you have property or other assets that you’re willing to put up as security against a loan? If so, a secured business loan may be a suitable solution for you. While secured loans can take a little longer to arrange, they generally contain more favourable interest rates and terms when compared to an unsecured loan. Plus, anything from your accounts receivable to a tractor or piece of land can be used as collateral.
Unsecured business loans: If you don’t have any assets, or if you’d prefer not to put up your assets as security, you can seek out unsecured business loans as an alternative funding solution. There are a range of unsecured loan types available, each is targeted towards differing needs. For example, a business credit card can support purchasing monthly inventory while you wait for invoices to clear, whereas a merchant cash advance could help you purchase new machinery or update your IT or equipment.
Start up loans: Start up loans are designed to support younger businesses who may sometimes struggle to find funding due to a shorter financial track record. They are usually more accessible than traditional business loans. They can feature some form of mentorship or government growth support, however, they can sometimes require a personal guarantee.
Do I need collateral to secure a loan under the Growth Guarantee Scheme?
Collateral requirements can vary by lender. While the guarantee reduces the lender’s risk, you may still be asked to provide some form of security—though it’s often less than what would be required for a standard, non-guaranteed loan.
What types of loans are covered under the Growth Guarantee Scheme?
Depending on the specific program, the Growth Guarantee Scheme can cover various types of financing, such as term loans, working capital loans, and business expansion loans. Some lenders also offer asset finance or invoice financing under the scheme, providing flexibility for different business needs.
Are startups eligible for the Growth Guarantee Scheme?
Many lenders offer support under the Growth Guarantee Scheme for early-stage businesses or startups, as long as they meet basic eligibility criteria, such as being registered in the UK and demonstrating growth potential. Specific startup requirements may differ, so consult with individual lenders for details.
What interest rates can I expect under the Growth Guarantee Scheme?
Interest rates under the Growth Guarantee Scheme are typically more competitive than standard business loan rates, thanks to the government-backed security. However, the exact rate you receive will depend on factors like your credit score, financial performance, and the lender’s specific terms.
How long does it take to get approved for the Growth Guarantee Scheme?
Approval times can vary, but most lenders aim to provide a decision within a few weeks—especially if you submit all the required documentation promptly. Factors like the lender’s internal processes, application volumes, and the complexity of your business can impact the timeline.
Can I apply for multiple loans under the Growth Guarantee Scheme?
In some cases, businesses can secure multiple loans under the scheme, provided each application meets the required eligibility criteria and you haven’t exceeded any maximum funding limits. Always confirm these details with your chosen lender to avoid surprises.
How to apply for the Growth Guarantee Scheme
Once you’ve confirmed eligibility using the criteria above, approach one of the British Business Bank accredited lenders and apply for a loan, overdraft, invoice finance, or asset finance solution and they can organise the guarantee on their end.
As a broker, we can help you apply by matching you with a suitable lender if you’re eligible. Simply fill in your information here to start the application process.
Apply for funding with Funding Options by Tide
We act as a broker to help businesses find funding between £1000 and £20M. Just click the link below and fill in the information to find out if you’re eligible for either the Growth Guarantee Scheme or another form of financing.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
