The Growth Guarantee Scheme (GGS) explained - what is it and how does it work?

Renamed the Growth Guarantee Scheme, the government’s extension of the Recovery Loan Scheme launched on 1 July 2024, supporting UK businesses with lending of up to £2 million

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Page written by Arabella McAvoy. Last reviewed on September 25, 2024. Next review due April 6, 2025.

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What is the Growth Guarantee Scheme (GGS)?

In the Spring 2024 Budget, the Chancellor announced that the Recovery Loan Scheme, originally set up to support the UK’s small businesses during the pandemic with government-backed lending, will be extended until 2026. The scheme has a new name – the Growth Guarantee Scheme (GGS) – but the terms remain broadly unchanged.

As per the Recovery Loan Scheme (RLS), lending can be in the form of term loans, overdrafts, asset finance, and invoice finance.

The maximum facility size is still £2 million for businesses in Great Britain and £1 million for those inside the scope of the Northern Ireland Protocol. The British Business Bank will continue to administer the scheme on behalf of the Secretary of State for the Department for Business, Energy, & Industrial Strategy (BEIS).

Under the Growth Guarantee Scheme, as with RLS, the government guarantees 70% of lending to each eligible business. In other words, the government underwrites 70% of what the lender could lose if a business defaults. Businesses are still liable for 100% of the borrowing.

The eligibility criteria are also unchanged – most importantly borrowers need to have a maximum turnover of £45 million.

While GGS aims to improve the loan terms available to UK businesses, these terms reflect the protection that the 70% government guarantee offers to lenders (e.g. interest rates will typically be higher). It is worth noting that some businesses might be able to find commercial loans with better terms by registering with Swoop.

It’s also worth registering with us if you’re looking to refinance any existing loans, e.g. loans you took out during the pandemic, or if you need extra cash to realise your growth plans. We’ve made it really easy for you to find out what finance options you might qualify for, whether it’s a startup loan, a loan to cover your VAT bill or a short-term loan to support your working capital.

How does the Growth Guarantee Scheme work?

Businesses can apply for a loan under the Growth Guarantee Scheme directly through a number of accredited lenders, or with the help of a broker like Swoop.

Our team will be able to tell you if you might be more successful in applying for lending through the Growth Guarantee Scheme – remember, the scheme exists to support businesses who might not meet a lender’s usual lending criteria.

As was the case with the Recovery Loan Scheme, 70% of the lending is guaranteed by the scheme – and, ultimately, by the government. To be clear, this government guarantee is to the lender – businesses remain 100% liable for the full amount of borrowing under the Growth Guarantee Scheme.

GGS covers term loans, overdrafts, asset finance and invoice financing.

When do businesses need to pay the money back?

Term lengths depend on the type of finance (product) you choose. Under the Growth Guarantee Scheme, lending terms can extend to:

six years for term loans and asset finance facilities (minimum three months)
three years for overdrafts and invoice finance facilities (minimum three months).

When does the Growth Guarantee Scheme start and end?

The Growth Guarantee Scheme started on July 1st, 2024 and will end on March 31st, 2026.

Why has the government extended and renamed the Recovery Loan Scheme?

The government declared 2024 as “the year of the SME” in February as it re-opened the Help to Grow campaign, opened a small business council, and extended (and renamed) the Recovery Loan Scheme by nearly two years. The Growth Guarantee Scheme will run until March 2026 and will enable an estimated 11,000 smaller businesses to access the finance they need.

The government’s measures announced in 2024 came with a clear acknowledgement of the importance of UK smaller businesses to the economy:

“Almost every business in the country is a small business (99.9%) who in turn support 27 million jobs across the UK, accounting for £4.5 trillion of annual turnover – which is why the government is making 2024 the year of the SME.”

The aim of the Growth Guarantee Scheme is to provide a vital support to smaller businesses across the country.

How does the Growth Guarantee Scheme differ from the Recovery Loan Scheme?

The GGS scheme is essentially an extension of the third and final iteration of the Recovery Loan Scheme and is ‘broadly unchanged’, according to the British Business Bank.

How much can I borrow under the Growth Guarantee Scheme?

Businesses can borrow up to a maximum of £2 million (per business) for all types of borrowing, i.e., term loans, overdrafts, invoice finance and asset finance.

This £2 million maximum remains the same as it was for the Recovery Loan scheme, for businesses in Great Britain. The maximum is still £1 million for those inside the scope of the Northern Ireland Protocol.

Businesses in Great Britain can apply for:

Loans or overdrafts between £25,001 and £2m
Invoice or asset finance between £1,000 and 2m.

Businesses inside the scope of the Northern Ireland protocol can apply for:

Loans or overdrafts between £25,001 and £1m
Invoice or asset finance between £1,000 and 1m.

Growth Guarantee Scheme (GGS) calculator

When comparing GGS to its predecessor RLS, the terms remain broadly unchanged, except for interest rates. Find out how much you could borrow with our Growth Guarantee Scheme calculator.

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Which businesses are eligible for the Growth Guarantee Scheme and what are the eligibility criteria?

The following types of business are eligible for GGS:

Sole traders
Limited partnerships
Limited liability partnerships
Corporations
Co-operatives and community benefit societies
Other any other legal entities carrying out business activity in the UK, with business activity operating through a business account.

Businesses have to meet certain criteria in order to access the scheme. Specifically, a business must:

have a turnover of less than £45 million
have been carrying out trading activity in the UK for a minimum of two years
be generating more than 50% of its turnover from trading activity (i.e., the sale of goods or services) in the UK, unless they are applying as a registered charity or further education establishment.
be viable (i.e., the lender must consider that the borrower has a viable business proposition)
not be in collective insolvency proceedings or any other business difficulty
have the intention of using the lending for a business purpose .

Three more things to note:

Lenders are required to undertake credit and fraud checks for all applicants to the Recovery Loan Scheme – the checks and approach vary according to the lender.
Lenders may take personal guarantees, in line with their normal commercial lending practices, but Principal Private Residences cannot be taken as security within the scheme.
If a lender is able to offer finance on normal commercial terms without the need to make use of the scheme, it is expected do so.

Which businesses are not eligible for the Growth Guarantee Scheme?

While the Growth Guarantee Scheme is widely available to UK businesses, there are some exceptions:

The following are not eligible:

Banks
Insurance companies
State-funded schools
Public sector bodies
Individuals (excluding sole traders or partners acting on behalf of a partnership).

Can sole traders access GGS?

Yes, sole traders are able to apply for the Growth Guarantee Scheme.

As long as a business satisfies the other eligibility criteria, GGS is open to:

sole traders
corporations
limited partnerships
limited liability partnerships
co-operatives and community benefit societies
any other legal entity carrying out business activity in the UK with business activity operating through a business account.

What are the interest rates?

Unlike RLS, where fees were capped at 14.99%, interest rates and fees for loans under the Growth Guarantee Scheme can differ based on your loan details.

However, lenders must pass on any benefits from the guarantee to your business, after covering their own costs, like the lender fee.

If you’re interested in finding out exactly what rates might be available to you, your first step would be to register with Swoop.

What is the government guarantee?

The government guarantee means that if a business defaults on any lending under the Ggrowth Guarantee Scheme, the lender can recoup 70% of the outstanding value of the loan from the government. This guarantee gives lenders confidence to lend to businesses. As the borrower, you are always 100% liable for the debt.

What can the funds be used for?

Businesses which successfully apply for Growth Guarantee Scheme finance can do so for any legitimate business purpose, for example:

Managing cash flow
Buying equipment
Meeting a one-off cost
Helping with payroll
Investing in, for example, marketing
Growing the business.

Can businesses apply if they've previously had a Recovery Loan, Bounce Back Loan, CBILS, or CLBILS?

In general, yes, but there are a few things to be aware of:

The amount you can borrow is capped (£2 million in Great Britain, £1 million in Northern Ireland) at a business group level. This includes any outstanding debt you are holding under CBILS or RLS. So if, for example, one part of the business group based in Birmingham has borrowed £500,000, the maximum amount of borrowing across the rest of the business group must not exceed £1.5 million.

You may use GGS to refinance existing RLS or CBILS loans; refinancing will be considered as a new application for GGS, and subject to meeting the eligibility and the lender’s criteria.

Re-financing can be sought with your existing lender or a different accredited lender.

Existing Bounce Back Loan Scheme borrowers can also refinance under GGS, but you should be aware that borrower protections and scheme eligibility/terms are different from RLS and CBILS. If in doubt, it’s worth registering with Swoop to understand your options.

Can a businesses with bad credit apply?

As you’d expect, businesses with bad credit have fewer GGS options available to them, and the interest rates they are able to secure would typically be higher.

That said, just as with the Recovery Loan Scheme, businesses which have been refused credit in the past might be able to apply for the GGS. Lenders review each application on its own merits, i.e., on a case-by-case basis.

If the GGS is not an option for your business, you might consider exploring business loan options and indeed other finance options available to your business. Register with Swoop to understand your options.

How much was borrowed under the Recovery Loan Scheme (the Growth Guarantee Scheme's predecessor)?

The first two iterations of the Recovery Loan Scheme, which were designed to support access to finance – and growth – for UK businesses as they recovered from the Covid-19 pandemic, supported UK smaller businesses with £4.3bn of finance.

The third and final iteration of the scheme, launched in August 2022, enabled more than £1bn of finance. Approximately 80% of facilities under the third iteration were offered outside of London, and more than 90% of the businesses supported had fewer than 50 employees.

Will I need a credit check to apply?

Yes, lenders will carry out a credit check and possibly a fraud check. The types of checks may vary between lenders. If you have been refused credit in the past, you may still be eligible for lending under the Growth Guarantee Scheme.

Can a business in difficulty apply?

If your business is in insolvency proceedings, you won’t be eligible.

You must also have a business proposition that is judged viable by the lender to obtain a loan under GGS.

Do exporters qualify?

Yes, exporters are eligible for the scheme, but there are strings attached. You mustn’t use the funding to:

Run an advertising campaign outside the UK
Manufacture products which will only be available to customers outside the UK
Establish a representative office outside the UK or appoint an agent outside the UK
Set up or operate a distribution network outside the UK
Fulfil a direct export order.

If you’re an exporter, you will need to self-certify that you will not use GGS for any of these purposes.

Am I eligible if I have received EIS?

Yes, as long as you meet the other criteria, you can still apply.

Important: If your business is a Northern Ireland applicant, you cannot go over a cap of €15 million of risk finance aid, or risk finance and de minimis aid combined. Relevant risk finance schemes in the UK include the Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCT) and the Seed Enterprise Investment Scheme (SEIS).

So if your business has received risk finance aid totalling more than €14.8 million, you will not be eligible for aid under this scheme.

Tips for applying for the Growth Guarantee Scheme

Make sure you have a clear idea about of the purpose of the loan and include this in your business plan.
As well as a business plan, you’ll need to get other paperwork together before you make your application. For example, you’ll need to prepare management accounts, financial accounts and information about any business assets. Swoop (and all lenders) can use this paperwork to make sure your loan is affordable and viable.
While you can apply directly to a lender, we’d suggest making your application via Swoop as our Funding Managers can identify the right type of borrowing and identify the most relevant lender(s) for your business. We’ll save you from having to contact multiple lenders – so we’ll help you to minimise the number of credit checks.
Make sure you’ve factored fees and interest into your forecasts.

Mistakes to avoid when applying

Term loans and asset finance facilities are for maximum six years; overdrafts and invoice financing facilities are for maximum three years. You’ll run into trouble if you don’t make sure the financing you’re applying for matches your cash flow needs.
Don’t borrow more than you can afford. You’ll need to know how you’ll repay your loan, especially if you give a personal guarantee (though the lender can’t take security on your principal private residence). So… keep your cash flow forecasts up to date and make sure they are realistic. It’s always a good idea to stress test your forecasts so that you can see how easily you can afford to repay the loan if your trading results aren’t as good as you hoped.
There many potential lenders often have more than one type of finance available and some lenders have restrictions on whom they’ll lend to. You’ll want to be certain that you’re applying for the right financing from the right lender or you’ll waste your valuable time. Here at Swoop we’re familiar with all the products on the market so we can save you time that you can instead spend running your business.
Don’t get stung by high interest rates! For example, if your loan application is declined by one lender and you’re offered a loan by another lender, the interest rates could be much higher. This is another reason to apply through Swoop rather than taking the direct approach and applying to multiple lenders.

How do I apply?

It’s simple and fast to apply online via our simple application, where you answer a few questions about yourself and your business.

We will keep this page updated as and when the government provides any updates.

Written by

Arabella McAvoy

Arabella is a former BBC business journalist who began her career as a policy analyst at the Bank of England and Financial Conduct Authority, and more recently worked in the communications and policy team at the British Business Bank.

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At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

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The UK Government’s Growth Guarantee Scheme (GGS) is a continuation of the popular Recovery Loan Scheme, with lending of up to £2m.

When comparing GGS to its predecessor RLS, the terms remain broadly unchanged, except for interest rates. Find out how much you could borrow with our Growth Guarantee Scheme calculator.