The Growth Guarantee Scheme (GGS): Everything You Need To Know
- George Dunn
- Jun 27, 2024
- 3 min read
Updated: Aug 20
The Recovery Loan Scheme, set to end in June 2024, will be extended and renamed the Growth Guarantee Scheme, maintaining its terms to ensure stability for lenders and businesses. Lenders will offer a 70% guarantee on finance up to £2 million for smaller businesses, aiming to support around 11,000 businesses from July 1, 2024, to March 31, 2026.
The first two phases, designed to aid UK businesses post-Covid-19, provided £4.3 billion in financing, and since August 2022, the third phase has disbursed over £1 billion, with 80% of facilities outside London and over 90% supporting businesses with fewer than 50 employees.
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How does the Growth Guarantee Scheme work?
Businesses can directly apply for lending under GGS through various accredited lenders or with the assistance of a broker like Approved Finance.
Our team can provide insights into whether applying for lending through the Growth Guarantee Scheme might enhance your chances of success. It's important to note that the scheme is designed to support businesses that may not meet a lender’s typical lending criteria.
Similar to the Recovery Loan Scheme, GGS offers a 70% guarantee on lending, ultimately backed by the government. This guarantee is extended to the lender, while businesses remain fully liable for the borrowed amount under the Government Guarantee Scheme.
GGS covers term loans, overdrafts, asset finance, and invoice financing.
What is the government guarantee?
Under the Government Guarantee Scheme, if a business defaults on its loan, the lender can recover 70% of the outstanding loan value from the government. However, businesses remain fully liable for the debt.
When do businesses need to pay the money back?
Repayment terms vary based on the chosen financial product under the Growth Guarantee Scheme:
Up to six years for term loans and asset finance facilities (minimum three months)
Up to three years for overdrafts and invoice finance facilities (minimum three months)
When does the Growth Guarantee Scheme start and end?
The Growth Guarantee Scheme commences on July 1, 2024, and concludes on March 31, 2026.
Interest rates
Interest rates offered depend on the lender and the business's circumstances, capped at an annual effective rate of interest and upfront fees not exceeding 14.99%, as specified by the British Business Bank.
What can the funds be used for?
Funds obtained under the Government Guarantee Scheme can be utilised for various business purposes, such as managing cash flow, purchasing equipment, meeting one-off expenses, covering payroll, investing in marketing, or expanding operations.
Tips for applying for the Growth Guarantee Scheme
Clearly define the purpose of the loan in your business plan.
Prepare necessary documentation, including management accounts, financial statements, and asset information.
Consider applying through Approved Finance for guidance and to streamline the process.
Mistakes to avoid when applying
Ensure the financing aligns with your cash flow needs.
Borrow responsibly and realistically assess repayment capabilities.
Choose the right lender and financing type to avoid unnecessary delays.
How do I apply?
Applications for the Growth Guarantee Scheme (GGS) are now open! Please check your eligibility today.
If you have any urgent questions and would like to speak to a member of our finance team, feel free to call on 01908 429888 or email us via info@approved-finance.co.uk.
