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Renamed the Growth Guarantee Scheme, the government’s extension of the Recovery Loan Scheme launches on 1 July 2024, supporting UK businesses with lending of up to £2 million
Page written by Arabella McAvoy. Last reviewed on June 13, 2024. Next review due April 6, 2025.
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 – 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 Government 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.
If your business is eligible, you can still apply for the current Recovery Loan Scheme until 30 June, 2024. The new Growth Guarantee Scheme opens on 1 July, 2024.
While the Government Guarantee Scheme (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.
Business will be able to apply for lending under GGS 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 Government Guarantee Scheme.
GGS covers term loans, overdrafts, asset finance and invoice financing.
Term lengths depend on the type of finance (product) you choose. Under the Growth Guarantee Scheme, lending terms can extend to:
The Growth Guarantee Scheme starts on July 1st, 2024 and the scheme will end on March 31st, 2026.
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 Government 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 this year 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.
The GGS scheme is essentially an extension of the most recent iteration of the Recovery Loan Scheme and is ‘broadly unchanged’, according to the British Business Bank.
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:
Businesses inside the scope of the Northern Ireland protocol can apply for:
The following types of business are eligible for GGS:
Businesses have to meet certain criteria in order to access the scheme. Specifically, a business must:
Three more things to note:
While the Growth Guarantee Scheme is widely available to UK businesses, there are some exceptions:
The following are not eligible:
Yes, sole traders are able to apply for the Government Guarantee Scheme.
As long as a business satisfies the other eligibility criteria, GGS is open to:
This we aren’t sure of yet. We’ll update this page when we know if you can borrow under both schemes.
As you’d expect, the interest rates you might be offered will depend on the lender and on your business circumstances. That said, the annual effective rate of interest and upfront and other fees cannot be more than 14.99%, according to the British Business Bank.
Bear in mind that lenders should offer commercial loans on the best possible terms, i.e., if a lender can provide a commercial loan with better terms than those available under the GGS they it is required to do so.
If you are interested in finding out what rates might be available to you, your first step would be to register with Swoop.
The government guarantee means that if a business defaults on any lending under the Government 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.
Businesses which successfully apply for Government Guarantee Scheme finance can do so for any legitimate business purpose, for example:
Yes, businesses can apply for finance under the Government Guarantee Scheme if they previously borrowed under BBLS, CBILS or CLBILS. Some businesses may be able to borrow more under the Government Guarantee Scheme than they did previously – though the maximum depends on the lender’s assessment and the scheme requirements. Some may be able to borrow less.
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.
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 current iteration of the scheme, launched in August 2022, has so far enabled more than £1bn of finance. Approximately 80% of facilities under this third iteration have been offered outside of London, and more than 90% of the businesses supported had fewer than 50 employees.
The Recovery Loan Scheme (RLS) will continue to be available until the end of June 2024.
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 Government Guarantee Scheme.
You can’t apply for GGS just yet, but you still have time to apply under its predecessor, the Recovery Loan Scheme. Register with Swoop to understand your options or to speak with a funding expert.
We will keep this page updated as and when the government provides any updates.
Written by
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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