The Growth Guarantee Scheme: what a government-backed business loan actually guarantees

A broker or a bank tells you your loan can be done "under the Growth Guarantee Scheme", and it sounds like a safety net. Government-backed. Seventy per cent guaranteed. Most owners hear that and quietly assume that if the business fails, the state picks up 70% of what is owed and they walk away from the rest.

That is precisely backwards, and it is the single most important thing to understand before you sign. The guarantee protects the lender. You remain liable for 100% of the debt, exactly as you would be on an ordinary commercial loan. If the business cannot repay, the lender pursues you first, through every normal recovery route, and only claims on the guarantee for what it cannot recover.

None of which makes the scheme a bad thing. It is genuinely useful, and it gets loans approved that would otherwise be declined. But it helps to know what it is actually doing.

What the guarantee is and who it protects

The Growth Guarantee Scheme (GGS) is run by the British Business Bank, and it is the direct successor to the Recovery Loan Scheme. It gives an accredited lender a 70% government guarantee against the outstanding balance of a facility, after the lender has exhausted its normal recovery process.

The point of that is to change the lender's risk arithmetic, not yours. A bank looking at a business with a decent trading record but thin security has to price and provision for the possibility of losing the whole balance. With 70% of the residual balance guaranteed, its downside shrinks, and a proposition that sat just the wrong side of the credit policy can move to the right side of it.

The guarantee does not make the loan cheaper, safer or easier for you. It makes the lender braver. That is worth a great deal, and it is not the same thing.

Who can use it, and for how much

The scheme is aimed at smaller UK businesses. Eligibility has been widened over its life: the turnover ceiling was raised from £45m to £54m, and the maximum term for facilities up to £1.1m was extended from six years to ten. The maximum facility size is £2m per business. Following the 2025 Spending Review, the scheme has been extended to run until 31 March 2030, which means it is a standing feature of the lending market rather than something to rush at.

It is not only term loans. Accredited lenders offer it across overdrafts, asset finance and invoice finance too, which matters if what you actually need is a working capital line rather than a lump sum. If you are weighing those up against each other, our breakdown of loan, overdraft or invoice finance is the better place to start than the scheme itself.

There are exclusions — certain sectors are out, and the business has to be trading in the UK and be viable but for the pandemic-era legacy issues in some cases — so the lender's own eligibility checklist is what governs, not a summary like this one.

Personal guarantees, and the one thing that is protected

This is where the scheme's rules genuinely help you, and where most coverage of it is vague.

Personal guarantees are permitted under GGS. They sit at each accredited lender's discretion, in line with that lender's normal commercial lending practice. So one lender may want a personal guarantee on a £150,000 facility and another may not, on the identical deal. That is not a scheme rule differing — it is two credit policies differing, and it is a reason to get more than one quote.

The fixed protection is this: a principal private residence cannot be taken as security within the scheme. Your home cannot be charged as security for a GGS facility, at any lender, on any size of deal. A personal guarantee is still a personal obligation and a lender can still enforce it against your assets generally — but the specific step of putting a legal charge over the family home as scheme security is off the table.

If you have not signed one before, read what you are really agreeing to on a personal guarantee before the paperwork arrives, not after.

A worked example

Take an illustrative case. A fabrication business with £900,000 turnover wants £120,000 to buy a second CNC machine and fund the working capital to run it. It has been trading six years, is profitable, and has no property to offer as security. Its bank looks at the proposition, likes the numbers, and cannot get it past credit on an unsecured basis at that size.

Under GGS, the same £120,000 goes through. Say it is priced at 9.5% over five years. The repayment is roughly £2,520 a month, and the total interest over the term is around £31,000. That is a normal commercial price — the guarantee did not reduce it.

What the owner has to weigh is unchanged by the word "government": will the second machine generate more than £2,520 a month of additional contribution, reliably, for five years? If the answer is a confident yes, the scheme has just unlocked a good decision. If it is a hopeful maybe, the scheme has just made it easier to make a bad one — and the owner is still 100% on the hook, plus whatever personal guarantee they signed.

What to actually do

You cannot apply to the British Business Bank. It does not lend. You apply to an accredited lender, and the list of them is published on the British Business Bank's site — it includes high street banks, challenger banks, asset finance houses and invoice financiers.

Three things worth doing before you approach anyone. First, ask directly whether the facility being quoted is a GGS facility, because a broker is not obliged to volunteer it. Second, ask what the pricing would be on a non-scheme facility from the same lender — sometimes there is no difference, sometimes there is, and you want to know. Third, get the personal guarantee position in writing early: whether one is required, what it is capped at, and who else is being asked to sign.

And get your file in order first. The guarantee changes the lender's appetite, not its evidence requirements — the documents a lender asks for and the cash flow forecast it will actually believe matter exactly as much on a scheme facility as an ordinary one. A weak application does not get approved because it has a government guarantee attached to it.

Common questions

If my business fails, does the government pay 70% of my loan?

No, and this is the most common misunderstanding of the scheme. The 70% guarantee is given to the lender, not to you, and it only bites after the lender has been through its full normal recovery process against the business and against any security or personal guarantees it holds. As the borrower you remain 100% liable for the debt throughout. If the lender ultimately claims on the guarantee, that is a payment from government to the lender for its residual loss — it does not extinguish or reduce what you owed, and it does not stop the lender pursuing you beforehand. Treat a GGS loan exactly as you would treat any other commercial borrowing.

Can a lender take my house as security under the scheme?

A principal private residence cannot be taken as security within the Growth Guarantee Scheme. That is a fixed scheme rule and it applies at every accredited lender, regardless of facility size. But be precise about what it does and does not cover. It stops a legal charge being taken over your main home as security for the facility. It does not stop a lender asking for a personal guarantee, and a personal guarantee is a personal debt that can in principle be enforced against you like any other. A second property or a buy-to-let is also not a principal private residence. If you are asked to sign anything, get the specific documents reviewed rather than relying on the general rule.

Is a GGS loan cheaper than an ordinary business loan?

Not necessarily, and you should not assume it. Accredited lenders price GGS facilities commercially, using their own rates and criteria — the guarantee reduces their risk of loss rather than obliging them to pass a saving on. In practice, the value of the scheme is usually access rather than price: it gets a decision to yes where the answer would otherwise have been no, particularly for businesses with a solid trading record but little or no security to offer. It is a fair question to put to the lender directly, though. Ask what the same facility would be priced at outside the scheme, and compare that with a quote from at least one other accredited lender.

How do I find out if a loan I have been offered is under the scheme?

Ask, in writing. There is no obligation on a broker or lender to lead with it, and scheme facilities are documented on the lender's own paperwork rather than under a distinctive government brand, so it is entirely possible to take a GGS loan without ever registering that you have. If it is a scheme facility, the lender is required to give you scheme-specific information. It also matters later: state aid and subsidy limits apply across scheme facilities, so if you take one and then want another, the earlier one counts. Keep a note of which of your facilities are scheme-backed and what the outstanding balances are.