Growth Guarantee Scheme (GGS) is a UK government-backed initiative run by the British Business Bank (BBB). It’s designed to help smaller businesses get loans they might struggle to access otherwise.
Here’s how it works in plain terms:
The government guarantees 70% of the loan a lender gives to a small business. That means if the business can’t repay, the lender gets most of the money back from the government. It reduces the risk for lenders, encouraging them to lend more, especially to businesses they’d normally reject.
1. Why Growth Guarantee Scheme (GGS)?
Schemes like CBILS, CLBILS, BBLS, and RLS kept business credit flowing during the pandemic, but they were temporary fixes. With rates still high, supply chains under strain, and working capital tight, smaller firms need more than a short-term patch. That’s where the Growth Guarantee Scheme (GGS) comes in. Launched on 1 July 2024, GGS is essentially RLS 4.0: same framework, updated branding, and a two-year window to lend until 31 March 2026. It aims to support around 11,000 businesses, about the size of a typical market town, before it wraps.
2. Core Terms
The main hook? A 70% government guarantee to the lender. Loan sizes range from £25,001 to £2 million per group (or just £1,000 for asset-based finance), with a lower cap of £1 million in Northern Ireland due to state-aid rules. Loan terms run from three months up to six years for term and asset deals; revolving credit tops out at three years. The product scope is wide: term loans, overdrafts, invoice finance, asset finance, and full asset-based lending. Pricing is commercial - most lenders pay a 150bps fee to the BBB and are expected to pass any capital-cost savings back to borrowers, after covering their own margin.
3. Eligibility
GGS targets UK-based trading businesses with group turnover up to £45 million. Applicants need to look viable on forward cash flow, this isn’t grant money, it’s debt with teeth. Firms that previously used CBILS, BBLS, or RLS are still eligible, but any existing subsidy eats into their rolling three-year state-aid cap. Sectors like farming and fisheries have tighter limits. Lenders keep full credit discretion, but standard KYC, AML, and fraud checks apply.
4. Accreditation and Market Reach
At launch, the British Business Bank (BBB) had signed up 41 lenders; by November 2024, the list grew to 50, with 20 already live. The cohort includes high-street names like NatWest, asset-finance specialists, and regional CDFIs. The BBB reviews systems, recovery processes, and reporting standards before onboarding anyone, so it’s not a quick rubber stamp. But once you’re in, you’re in.
5. Why It Works for Lenders
Start with the basics: a 70% guarantee lowers your loss-given-default, especially helpful on sub-£2 million tickets where due diligence costs can pile up. Then there’s the capital angle; thanks to lower risk weights, banks can ease RWA pressure, which is a big deal in a high-rate environment. Margins can still hold up: the 150bps fee isn’t a killer, and asset-backed deals offer plenty of spread potential. Don’t forget the cross-sell upside either, FX, treasury, and insurance often follow. And yes, supporting SMEs looks good in your ESG reporting and to the regulators.
6. Watch-outs and Fine Print
This isn’t a free pass. You must exhaust your normal recoveries before triggering the guarantee. Loan documentation must match your standard terms—no shortcuts—or the indemnity could be invalid. Personal guarantees are still your call, but you can’t take a director’s home as security. Monthly MI uploads are mandatory, except for granular templates. And subsidy tracking is on you: lend to a business that’s maxed out, and your claim gets voided. Bottom line: treat GGS loans like standard credit. The guarantee is a buffer, not a business model.
7. Strategic Angles by Lender Type
High-street banks can use GGS to defend SME market share without denting capital ratios, just slot it into the existing funnel. Specialist lenders can lean into asset-heavy deals like plant and equipment, where lumpy cash flows are offset by strong secondary values. Fintech lenders (if accredited) can pair the 70% guarantee with automated underwriting to push unit costs down. For CDFIs and mutuals, the lower fee helps them reach underserved towns that larger lenders often ignore.
8. Green Pilot and What’s Next
The BBB is quietly piloting a “Green GGS” track for firms investing in sustainability, think solar panels, energy-efficient machinery, EV fleets. If you’ve got an ESG lending strategy, now’s the time to get involved. Expect the lender list to grow past 60, and keep an eye on possible changes to the guarantee fee if defaults diverge from projections. Either way, the clock is ticking: loans must be offered by 31 March 2026, so you’ll need to hit your stride this year.
9. Final Take
Government guarantees aren’t new, this playbook goes back to the Enterprise Finance Guarantee days. The core idea is simple: de-risk lending to get more capital into the SME economy. GGS won’t solve underinvestment overnight, but for lenders willing to operate within the rules, it’s a practical, capital-efficient tool. Think of the guarantee as a seatbelt - it won’t drive the car for you, but it makes the ride safer. Cut corners on MI, ignore subsidy rules, or slack on recoveries, and the scheme will bite back. Do it right, and it’s a smart addition to your product mix.
