Announced by the Chancellor today, the Growth Guarantee Scheme will provide approximately £500m of additional lending capacity to help more smaller businesses across the UK. The extra funding is aimed at smaller businesses that may need support with cashflow issues due to changes in global tariff rates.

Delivered by the British Business Bank through around 50 accredited lenders, the Growth Guarantee Scheme has so far enabled £2.1bn of finance through 13,447 facilities.

The Growth Guarantee Scheme can generally support facility sizes of up to £2m and provides the lender with a 70% government-backed guarantee, helping lenders to support viable smaller businesses. The additional capacity is being provided to support around £500m of extra lending, targeted toward smaller UK businesses affected by the changes to global tariff rates.

Businesses can use the finance for any legitimate business purpose, including managing cashflow or working capital requirements due to disruption caused by changes to global tariffs. However, businesses must be able to afford to take out additional debt finance for these purposes.

Scheme features

The Growth Guarantee Scheme aims to improve the terms on offer to borrowers. If a lender can offer a commercial facility on better terms, they will do so.

Key features include:

• Up to £2m per business group: The maximum amount of a facility provided under the scheme is generally £2m per business group for borrowers outside the scope of the Northern Ireland Protocol, and up to £1m per business group for Northern Ireland Protocol borrowers.
• Wide range of products: The Growth Guarantee Scheme supports a broad range of finance solutions. The additional capacity for the scheme is intended to support term loans, overdrafts and other products that help support cashflow challenges. Not all lenders will be able to offer all products.
• Pricing: Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal. The lender’s pricing will take into account the benefit of the Government guarantee and a fee that is charged to the lender for the guarantee
• Guarantee is to the lender: The scheme provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility after it has completed its normal recovery process. The borrower always remains 100% liable for the debt
• Decision-making delegated to the lender: Growth Guarantee Scheme -backed facilities are provided at the discretion of the lender. Lenders are required to undertake their standard credit and fraud checks for all applicants.