Growth Guarantee Scheme: how it works and who qualifies
The Growth Guarantee Scheme (GGS) is a government scheme that backs loans to smaller UK businesses. It gives accredited lenders a 70% government guarantee on facilities up to £2 million, which makes them more willing to lend. But here is the point most pages bury: the guarantee protects the lender, not you. If your business cannot repay, you still owe 100% of the debt.
The scheme replaced the Recovery Loan Scheme on 1 July 2024 and runs until 31 March 2030. It was expanded in July 2026 with longer loan terms, a bigger turnover cap and a lot more lending capacity. This guide covers how the guarantee really works, who qualifies, what it costs and how to apply.
What the Growth Guarantee Scheme is
The Growth Guarantee Scheme launched on 1 July 2024 as the successor to the Recovery Loan Scheme, and it runs until 31 March 2030.
Here is the basic deal. The government promises accredited lenders that it will guarantee 70% of each facility. If a borrower defaults, the lender can claim back most of its loss from the government. That safety net makes lenders more willing to say yes to businesses they might otherwise turn down.
The scheme covers four types of borrowing:
- Term loans, a lump sum repaid over a set period
- Overdrafts, a flexible borrowing limit on your business account
- Asset finance, borrowing to buy vehicles, machinery or equipment
- Invoice finance, an advance against money your customers owe you
You do not apply to the government. You apply to an accredited lender, and the guarantee sits in the background between that lender and the British Business Bank.
The 70% guarantee protects the lender, not you
This is the part people get wrong, so it is worth being blunt. You remain liable for 100% of the debt. The guarantee is a promise from the government to the lender, not to you.
If your business cannot repay, the lender chases you for the money in the normal way, just as it would with any other loan. The guarantee typically covers part of the lender's loss after it has tried to recover the debt. None of that reduces what you owe by a penny.
The same logic applies to personal guarantees. Lenders make their own decisions on security, and some ask you to sign a personal guarantee. The government's guarantee to the lender does not cancel or soften yours. If the business fails and you have signed one, the lender can pursue your personal assets.
Good for: viable businesses that keep getting turned down for ordinary borrowing. Watch out for: reading "government backed" as "government pays if it goes wrong". It does not work that way.
Who qualifies
The headline rules are simple:
- Your business is in the UK (the facility limits differ between Great Britain and Northern Ireland Protocol businesses, covered below)
- Turnover is up to £54 million a year (this cap was raised in July 2026, so some older pages still say £45 million)
- You borrow through a lender accredited by the British Business Bank
Beyond that, each accredited lender applies its own credit checks. The scheme does not force any lender to approve you. A lender still has to believe your business can afford the repayments, and it will typically want to see accounts, bank statements and a clear reason for borrowing, the same as with any business loan.
What you can get
Facilities go up to £2 million for businesses in Great Britain, and up to £1 million for businesses that fall under the Northern Ireland Protocol.
| Product | What it is | Maximum term |
|---|---|---|
| Term loan | Lump sum, repaid in instalments | Up to 10 years (for facilities up to £1.1 million) |
| Asset finance | Borrowing to buy vehicles, machinery or equipment | Up to 10 years (for facilities up to £1.1 million) |
| Overdraft | Flexible borrowing limit on your account | Up to 3 years |
| Invoice finance | Advance against unpaid customer invoices | Up to 3 years |
The 10-year maximum is new. Until July 2026, term loans and asset finance were capped at 6 years. A longer term brings the monthly repayment down and pushes the total interest up. Both of those deserve a number, and they get one further down this page.
What it costs: a worked example
There is no single scheme interest rate. Each accredited lender sets its own rates and fees, so a Growth Guarantee Scheme loan is not automatically cheap. The guarantee helps you get a yes. It does not guarantee a good price.
From our directory, Funding Circle offers Growth Guarantee Scheme loans of £25,001 to £250,000 from 13.4% per year.
Here is roughly what that headline rate looks like on a real loan, assuming interest is charged monthly on the reducing balance, which is the usual way term loans work:
- Borrow £100,000 over 5 years at 13.4% per year
- Monthly repayment: roughly £2,300
- Total interest over the 5 years: around £38,000, before any fees
Two honest caveats. "From 13.4%" is the floor, and the rate you are actually offered depends on the lender's view of your business. Lenders also often charge arrangement or other fees on top, so the total cost matters more than the headline rate.
And remember the core mechanic: if the loan goes bad, that £100,000 is still your debt, all of it.
What the 10-year term really costs
The change most likely to alter what you can afford is the jump from a 6-year maximum term to a 10-year one. A longer term lowers the monthly payment and raises the total interest. Here is the size of each.
The figures below are illustrative round numbers rather than a quote from any lender: £100,000 borrowed at 12% a year, interest charged monthly on the reducing balance, no fees.
| Term | Monthly repayment | Total interest | Total repaid |
|---|---|---|---|
| 3 years | £3,321 | £19,572 | £119,572 |
| 5 years | £2,224 | £33,467 | £133,467 |
| 6 years (the old maximum) | £1,955 | £40,761 | £140,761 |
| 8 years | £1,625 | £56,027 | £156,027 |
| 10 years (the new maximum) | £1,435 | £72,165 | £172,165 |
Going from 6 years to 10 takes £520 a month off the bill, about 27% less. It also adds £31,404 of interest, about three quarters more than the £40,761 the 6-year version charges. Put the two together and every £1 you shave off the monthly payment costs roughly £60 in extra interest over the life of the loan.
The higher the rate, the more stretching costs. That £60 is not a fixed rule. It moves with the interest rate, because a longer term is really a way of buying more interest. The same £100,000, 6 years against 10, at three illustrative rates:
| Rate | Interest over 6 years | Interest over 10 years | Extra | Cost per £1 off the monthly bill |
|---|---|---|---|---|
| 8% | £26,239 | £45,593 | £19,354 | about £36 |
| 12% | £40,761 | £72,165 | £31,404 | about £60 |
| 16% | £56,181 | £101,016 | £44,834 | about £91 |
Rates on scheme loans are set by each lender and not by the scheme, so which row you sit nearest depends on the offer in front of you. On a rate in the teens, a 10-year term is an expensive way to buy breathing room.
A long term sets a floor under the payment, not a ceiling on the speed. The extra interest above is what you pay if you run the loan for the full ten years, and you do not have to. Take the 10-year loan at 12% and pay £1,955 a month, which is the 6-year amount, and it clears in exactly 72 months for exactly the 6-year interest. Pay something in between, say £1,700, and it clears in about seven and a half years for about £51,600 of interest, roughly £20,600 less than running it to term.
So a longer term can work as insurance rather than as a cost: a low payment you have to make, and a higher one you choose to make when trade allows. Two questions decide whether that holds. Are overpayments free of charge, and is the interest worked out on the reducing balance or fixed to the full term at the start? If there is an early repayment charge, or the interest is baked in on day one, clearing the loan early saves less than the table suggests, or nothing at all.
The sum on your own quote. None of this arithmetic is needed to compare two real offers. Multiply the monthly repayment by the number of months, then subtract what you are borrowing. That is the cost of the money, fees aside. Run it on both terms a lender puts in front of you and the difference is what the longer one costs.
Two limits on the 10-year term. It covers term loans and asset finance on facilities up to £1.1 million, while overdrafts and invoice finance under the scheme still stop at 3 years. And a maximum term is a maximum, not an entitlement, so the lender decides what it will actually offer.
One last thing that shows up in no table at all. A 10-year loan keeps the debt, and any personal guarantee signed behind it, alive for ten years instead of six. That is four more years in which the business has to keep going for the guarantee never to be called.
How to apply
You can only get a Growth Guarantee Scheme facility through an accredited lender. You cannot apply to the government directly.
- Check the accredited lender list. The British Business Bank publishes the full list on its website.
- Or go through a broker or marketplace. Swoop and Tide Funding Options are marketplaces that can match you with accredited lenders, which saves working through the list yourself.
- Apply as you would for any business loan. The lender runs its normal checks and handles the guarantee side with the British Business Bank. You never deal with the government directly.
Works if one lender turns you down, because nothing stops you applying to a different accredited lender instead.
What changed in July 2026
On 12 July 2026 the Chancellor announced an expansion of the scheme:
- An extra £6.5 billion of market lending capacity over four years, with annual capacity rising to £3.35 billion by 2028-29
- Around 20,000 businesses a year supported, up from around 8,000
- Maximum term for term loans and asset finance extended from 6 to 10 years, for facilities up to £1.1 million
- Turnover cap raised from £45 million to £54 million
In plain terms: more money in the pot, longer to repay it, and more businesses inside the turnover cap. If you looked at the scheme before mid 2026 and did not fit, the newer rules may change that.
Common questions
Does the government repay my loan if my business fails?
No. The 70% guarantee protects the lender, not the borrower. You remain liable for 100% of the debt, and if you have signed a personal guarantee the lender can pursue your personal assets too.
Is a Growth Guarantee Scheme loan cheaper than a normal business loan?
Not automatically. Each accredited lender sets its own rates and fees. Funding Circle, for example, offers scheme loans from 13.4% per year at the time of checking. Whether it beats an ordinary business loan comes down to the total cost, fees included, and that varies lender by lender.
Does taking the 10-year term cost more than the old 6-year one?
Yes, if you run it to the end. On an illustrative £100,000 at 12% a year, six years costs about £40,800 in interest and ten years about £72,200. The monthly payment falls by about £520, so each £1 of monthly relief works out at roughly £60 in extra interest. The gap widens as the rate rises: at 16% a year the same swap costs about £91 per £1 off the monthly bill.
Can I take the 10-year term and still repay quickly?
On a loan where interest is charged on the reducing balance, yes, and it costs no more than the shorter term would have. Paying the six-year amount on a ten-year loan clears it in six years and the interest comes out the same. Two things can stop that: an early repayment charge, or a lender that fixes the interest to the full term instead of charging it on the balance. Both are worth asking about before signing.
What happened to the Recovery Loan Scheme?
It was replaced. The Growth Guarantee Scheme took over from the Recovery Loan Scheme on 1 July 2024 and is due to run until 31 March 2030.
How much can I borrow under the scheme?
Up to £2 million per business in Great Britain, or up to £1 million for businesses under the Northern Ireland Protocol. The amount you are actually offered depends on the lender's own checks.
Who counts as an accredited lender?
A lender approved by the British Business Bank to offer the scheme. The full list is on the British Business Bank website, and marketplaces such as Swoop and Tide Funding Options can match you with accredited lenders.
Will I still need a personal guarantee?
That depends on the lender, which sets its own security requirements. If a lender asks for one, the scheme's guarantee does not cancel it. The government covers part of the lender's loss, not yours.
Facts checked on 7 September 2026. Information, not advice: check terms with the lender or scheme and speak to an accountant or FCA-authorised broker if unsure.