The Government-backed scheme could give eligible SMEs another route to finance when they are looking to invest, expand or manage working capital. But what is the Growth Guarantee Scheme, who can use it and what does it mean for your business?
Finding the right finance can be one of the biggest decisions a small business owner has to make.
You might need funding to buy equipment, take on staff, increase stock, invest in technology or take on a new contract. But getting finance isn't simply about finding someone willing to lend you the money. The funding needs to be right for what you're trying to achieve and affordable for the business to repay.
That's where the Growth Guarantee Scheme (GGS) could come in.
The government-backed scheme, delivered by the British Business Bank, is designed to improve access to finance for smaller UK businesses. The government guarantees 70% of the lender's outstanding balance on an eligible facility, reducing some of the lender's risk.
For an SME, that could mean another potential route to finance when a lender is considering an application.
It doesn't mean the government is lending you the money, and it doesn't mean the borrowing is risk-free. You remain responsible for repaying 100% of the amount you borrow, plus interest and fees.
How does the Growth Guarantee Scheme work?
The simplest way to think about the scheme is that the government is providing a guarantee to the lender.
If an eligible business defaults on its borrowing, the government guarantee covers 70% of the lender's outstanding balance after the lender has followed its normal recovery process.
The guarantee is therefore designed to give lenders additional protection.
It does not protect the business from having to repay what it owes.
Eligible facilities can include term loans, overdrafts, asset finance, invoice finance and asset-based lending, depending on the lender.
The scheme can support facilities of up to £2 million for eligible businesses.
Who can use the Growth Guarantee Scheme?
The scheme is aimed at smaller businesses operating in the UK.
There are eligibility requirements around the type of business, its trading activity and financial position, and the lender must consider the business viable.
The government has also announced changes to expand the scheme, including increasing the turnover eligibility limit from £45 million to £54 million.
Meeting the eligibility criteria doesn't guarantee you'll receive finance.
The lender still makes the final decision and carries out its usual credit and affordability checks.
What could you use GGS finance for?
There isn't one type of business that the scheme is designed for.
Depending on the finance and lender, funding could potentially be used for investment in equipment or technology, vehicles, premises, stock, working capital or other business needs.
For example, a growing business might need finance to buy equipment before it can take on more work. Another might need working capital to cover the gap between paying suppliers and receiving money from customers.
The important thing is to start with what the business needs the money for, rather than starting with the loan.
Different types of finance suit different situations. The right option for buying a vehicle may not be the right option for managing short-term cash flow.
Could the scheme make finance more accessible?
Potentially.
The government guarantee reduces some of the risk to the lender, which is intended to improve access to finance for eligible smaller businesses.
But GGS isn't a way around normal lending checks.
If a business can't demonstrate that it can afford the repayments, the government guarantee doesn't change that. The lender still assesses the application and decides whether to provide finance.
That makes it particularly important for business owners to understand their numbers before applying.
Know your cash flow before you borrow
A business can look profitable on paper and still struggle to meet repayments if cash is tight.
Before taking on finance, look at what comes into the business each month, what goes out and what your cash position looks like over the period of the borrowing.
A cash flow forecast can help you see what happens if sales are lower than expected, a customer pays late or costs increase.
It can also help you work out how much finance you actually need.
Borrowing more than you need means taking on more interest and repayments. Borrowing too little could leave you short of the cash you need to achieve what you set out to do.
Don't assume government-backed means cheaper
It's also worth being clear about what the GGS guarantee does - and doesn't - do.
The government guarantee protects the lender against part of its potential loss. It doesn't set the interest rate for your business.
The lender decides the terms of the finance, including the interest rate and fees, subject to the scheme's rules.
That means you should still look at the total cost of borrowing and compare the options available to you.
A government-backed scheme isn't automatically the cheapest form of finance.
What's changed with the Growth Guarantee Scheme?
The scheme has recently been expanded and put on a longer-term footing.
In July 2026, the government announced that the expansion is expected to unlock a further £6.5 billion of market lending over four years.
Some facility terms are also being extended from six years to ten years, while the turnover eligibility limit is increasing from £45 million to £54 million.
The British Business Bank says the scheme has already delivered more than £3.7 billion of financing to smaller businesses since it launched in 2024.
That means the scheme is becoming a more significant part of the funding landscape for UK SMEs.
How do you apply?
You don't apply directly to the government.
The Growth Guarantee Scheme is available through accredited lenders, with the British Business Bank publishing a list of participating providers.
You don't necessarily need to be an existing customer of a participating lender, although the lender will still carry out its own assessment before deciding whether to offer finance.
Is the Growth Guarantee Scheme right for your business?
The GGS could be worth considering if your business has a clear reason for borrowing, a realistic plan for using the money and sufficient cash flow to manage the repayments.
But don't start with the question “How much can I borrow?”
Start with “What does my business need, and what type of finance makes sense?”
Look at the purpose of the funding, the total cost, the repayment period and what happens to your cash flow once the repayments start.
The Growth Guarantee Scheme could give eligible SMEs another route to finance. But the government guarantee doesn't remove the need to make a good borrowing decision.
It can reduce the lender's risk. It doesn't reduce yours.
