The British Business Bank has recently launched the successor to the Recovery Loan Scheme: The Growth Guarantee Scheme (GSS). It is a new government backed initiative designed to help small and medium businesses access finance to invest and grow. The scheme will undoubtedly help many businesses to scale up or stay ahead of competition.

This scheme presents a fantastic opportunity to support your business growth. The funds can be used for various business purposes, including purchase of new equipment such as plant and machinery, managing cash flow and other business investments, provided your business can manage the additional debt.

In this blog we will look at the details of the Growth Guarantee Scheme, key features of the scheme, eligibility criteria and how you can apply for a loan under this scheme.

The GSS is estimated to provide business finance to around 11,000 UK businesses to fund more sustainable growth and economic recovery in the UK.

It can support facility sizes of up to £2m and provides the lender with a 70% government backed guarantee but the borrower always remains 100% liable for the debt. It is aimed at providing added security and confidence to the lenders.

The product range on offer includes access term loans, overdrafts, asset finance, invoice finance, and asset-based lending.

Minimum facility sizes start at £1,000 for asset finance, invoice finance, and asset-based lending, and £25,001 for term loans and overdrafts. The maximum facility size is up to £2 million per business.

Flexible repayment terms are on offer ranging from 3 months to 6 years depending on the product applied for.

As with all business finance, there is eligibility criteria that you will be required to meet in order to benefit from the scheme. If turned down by one lender, you can still approach other lenders.

The criteria are as follows:

Turnover: Whilst the scheme is being promoted for small business, the scheme supports businesses with an annual turnover limit up to £45m (on a group basis, where part of a group).

UK based: The borrower must be carrying out trading activity in the UK and generating more than 50% of its income from trading activity.

Viability: The lender must consider that the borrower has a viable business proposition.

Business in difficulty: The borrower must not be a business in difficulty or part of insolvency proceedings.

Ineligibility: Banks, Building Societies, Insurers and Reinsurers (excluding Insurance Brokers), Public sector bodies and state-funded primary and secondary schools are not eligible for the scheme.

The funding provided through GGS is regarded as a subsidy and is deemed to benefit the borrower. There is a limit to the amount of subsidy a borrower can receive within a three-year period. All borrowers in receipt of a public subsidy should be provided with a written statement, confirming the amount and type of subsidy received. More information on subsidies is available here.

Businesses that benefited from or were previous applicants for the Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme, Bounce Back Loan Scheme or a Recovery Loan Scheme facility before 30 June 2024 are also eligible for Growth Guarantee Scheme. However, borrowing under these schemes may reduce the maximum amount the borrower is eligible for.

As with other business finance, the funding is provided at the discretion of the lender. Under GGS, lenders are required to undertake their standard credit, fraud, anti-money laundering (AML), and know-your-customer (KYC) checks for all applicants.

If you’re seeking business finance and your company meets the eligibility criteria, we can assist you throughout the application process and liaise with lenders on your behalf.

Not all lenders within the scheme provide every type of finance available, so we recommend reaching out to us. We can help you determine the most suitable type, amount, and lender for your needs.

The lender will conduct a full credit check, and we will help provide the necessary evidence to demonstrate that your business can afford to repay the finance offered. The information a lender usually requires includes:

• Financial and Management Accounts
• Business plans
• Details of assets
• Details of previous subsidy awards
• Details on existing loans
• Debt Schedule and Financial Models
• Cash Flow Forecasts
• Information Memorandum (sometimes)

As with other financial products, lenders will assess your application. We can leverage our network of lenders to submit your application to all suitable parties. From there, we will select the best offer for your business.

In some instances, lenders may offer better terms on finance options than a GGS-backed facility, should they be available.

Feel free to contact us at 03330606633 or email us at [email protected] with the subject "Growth Guarantee Scheme" if you have any questions or would like to schedule a free consultation with our advisory team.