Could the new Growth Guarantee Scheme from British Business Bank provide the finance you need to help scale up or stay ahead?
Last month, British Business Bank announced the launch of the Growth Guarantee Scheme, a successor to the Recovery Loan Scheme. Providing lenders with a 70% government-backed guarantee, the scheme encourages lending to small businesses and at more competitive interest rates. Whilst the finance can be used for any legitimate business purpose – including managing cash flow and investment – it is important to recognise that the scheme is aimed at businesses looking to invest in driving growth, not those currently struggling.
So far, the British Business Bank has accredited just over 40 lenders for the scheme, including Barclays, HSBC, Lloyds Bank and NatWest. These lenders will provide a wide range of finance types to smaller businesses, including term loans, overdrafts, asset finance, invoice finance and asset-based lending.
Scheme features
The scheme is open to businesses with an annual turnover of up to £45 million with borrowing of up to £2 million allowed. However, the minimum loan starts at £1,000 for asset finance, invoice finance and asset-based lending, and £25,001 for term loans and overdrafts.
Businesses can borrow over terms ranging from three months up to six years, with overdrafts, invoice finance and asset-based lending available from three months up to three years.
Businesses that took out a Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or a Recovery Loan Scheme (RLS) facility before 30th June 2024 can still access the Growth Guarantee Scheme, but borrowing under these schemes may reduce the maximum amount the borrower is eligible for.
Under the scheme, interest rates and fees charged by lenders will vary and will take into account the benefit of the Government guarantee. While personal guarantees can be taken at the lender’s discretion, they are banned from asking people to put up their homes as security.
The Growth Guarantee Scheme will not suit every business – and it might not necessarily be the cheapest form of borrowing – however, it is certainly an option considering that accessing adequate financing for growth and expansion remains a persistent challenge for many.
Further information on the Growth Guarantee Scheme, including the current list of accredited lenders, is available on the British Business Bank website.
What is the British Business Bank?
British Business Bank is a government-owned economic bank specialised in helping businesses in the UK access financial support.
