Could the new Growth Guarantee Scheme help boost your business?

The new government-backed Growth Guarantee Scheme is aimed at helping businesses recover from the pandemic. Is it worth considering and are you eligible?

Financial growth graph, coins, plants and light bulb
(Image credit: Getty Images)

Is your business thinking about borrowing to invest in the months ahead? If so, a new state-backed scheme might enable you to arrange finance on more attractive terms than a conventional debt facility. The Growth Guarantee Scheme (GGS) is the latest in a series of government-backed loan programmes aimed at businesses seeking to recover from the effects of the pandemic. The scheme, which opened on 1 July and is likely to run until March 2026, is expected to support around 11,000 businesses, primarily smaller enterprises, with ambitions to expand. 

In practice, the GGS operates on similar principles to previous schemes of this type. The financing comes from private sector providers – around 40 banks, building societies and other lenders have agreed to take part – but the government stands behind the loans. If a business defaults, the Treasury will cover up to 70% of the value of the advance to cushion the lender from losses. This guarantee should enable lenders to finance more businesses and to do so at more competitive interest rates. Lenders themselves will decide what rates they are prepared to charge, but the British Business Bank, in charge of administering the scheme, insists pricing will reflect the benefit of the state guarantee. 

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.