Growth Guarantee Scheme expansion: what the government guarantee does — and does not do
The Growth Guarantee Scheme is being expanded to support a further £6.5 billion of market lending over four years, with the British Business Bank estimating that around 33,000 businesses could benefit. That does not mean the Government lends the money or repays the loan for the business.
The guarantee covers 70% of the lender’s eligible loss after its normal recovery process. The borrower remains 100% liable for the debt, and the lender still decides whether the business is viable, affordable and acceptable.
Quick summary
- The British Business Bank announced a £6.5 billion uplift on 12 July 2026.
- The scheme already supports term loans, overdrafts, asset finance, invoice finance and asset-based lending through accredited lenders.
- Facilities are generally available up to £2 million per business group outside the scope of the Northern Ireland Protocol, subject to scheme and lender rules.
- The guarantee is to the lender. The borrower remains fully responsible for repayment.
- Personal guarantees can be required at the lender’s discretion, although a principal private residence cannot be taken as security within the scheme.
- Announced enhancements, including turnover eligibility up to £54 million and terms up to ten years for some term loans and asset finance, are being operationalised and may not yet be available from every lender.
The business problem
A viable SME can be refused funding because it lacks enough security, has a limited track record or sits just outside a lender’s normal appetite. If that has happened, what to do after a bank decline covers the practical next steps.
That can stop a business buying equipment, taking on staff, funding an order or managing the cash gap created by growth. The Growth Guarantee Scheme is designed to give accredited lenders more confidence to support viable businesses they might not otherwise fund.
It does not remove credit risk. It reallocates part of the lender’s loss risk to Government, while leaving the borrower’s repayment obligation unchanged.
What has been announced
On 12 July 2026, the British Business Bank said the scheme would receive a £6.5 billion uplift over the next four years. It estimated that around 33,000 businesses across the UK could access finance as a result.
It also announced planned flexibility for term loans and asset finance with terms up to ten years, and an increase in the annual turnover eligibility limit from £45 million to £54 million.
The distinction matters: the existing scheme remains open under its current terms, while accredited lenders are working to make the enhancements available. A business should check the live position with the lender rather than assume every announced change is already operational.
How the scheme works
- Finance is provided by an accredited lender, not directly by Government.
- The lender carries out its normal credit, affordability and fraud checks.
- The lender decides the product, amount, price, security and whether to approve.
- The Government-backed guarantee covers 70% of the lender’s outstanding loss after normal recovery action.
- The borrower remains 100% liable for principal, interest and fees.
- If the lender can provide a normal commercial facility on better terms, it should do so.
The guarantee is designed to change lender appetite at the margin. It is not a grant, subsidy paid into the business bank account or insurance policy for the borrower.
What funding can be supported
The scheme can support a range of products. Availability depends on the accredited lender.
Term loans
A term loan is a fixed amount repaid over an agreed term. Often suitable for equipment, expansion costs, refinancing or a defined investment.
Overdrafts and revolving facilities
Revolving facilities can support variable short-term cash needs, subject to lender availability and review.
Asset finance
Asset finance can fund vehicles, plant, machinery and equipment, with the asset forming part of the security.
Invoice finance and asset-based lending
Invoice finance and asset based lending can release cash from receivables and, in some cases, other business assets. These facilities involve operational controls and ongoing reporting.
Current headline eligibility
Under the existing published terms, the scheme generally supports facilities up to £2 million per business group for borrowers outside the scope of the Northern Ireland Protocol. Different limits can apply in Northern Ireland and in sectors with lower subsidy limits.
The business must be trading in the UK, meet the turnover and subsidy rules, and be considered viable by the lender. The lender must also believe the business can afford the additional debt.
A business in relevant insolvency proceedings or treated as a business in difficulty will not normally qualify.
When the scheme works well
- The business is viable but lacks enough conventional security.
- There is a clear investment, order, asset or working-capital purpose.
- Repayments are affordable from realistic trading cash flow.
- The product term matches the purpose.
- The funding creates additional profit, capacity or resilience greater than its cost.
- Management information is current and the request is well evidenced.
- The business understands the security, personal guarantee and default position.
Where it is a poor fit
- The business is relying on the guarantee as a substitute for affordability.
- The loan will fund recurring losses with no credible turnaround.
- Management assumes 70% of the debt will be written off after default.
- The proposed term is shorter than the investment payback period.
- The business is already overleveraged or in insolvency proceedings.
- The lender’s fees, security or personal guarantee make the facility disproportionate.
- A normal commercial facility is available on better terms.
Government support does not make unsuitable borrowing safe. The debt still has to be serviced by the business.
Costs, security and personal guarantees
Pricing varies by lender and proposal. The lender should reflect the benefit of the guarantee, but it also pays a fee for that guarantee and will price for the remaining risk, product and operational cost.
Personal guarantees can be taken at the lender’s discretion under normal commercial practices. The published scheme rules state that a principal private residence cannot be taken as security within the scheme.
That restriction does not make a personal guarantee meaningless. Other personal assets and income may still be exposed depending on the wording, cap and enforcement position. Independent legal advice may be appropriate. We cover the practical detail in talking to SMEs about personal guarantees.
Also check arrangement fees, legal costs, valuation charges, monitoring fees, early-repayment charges, default interest and exit costs.
What happens if trading deteriorates
The lender will follow the finance agreement. It may stop further drawings, reduce availability, increase monitoring, demand additional information, enforce security or call a guarantee if a default occurs.
Only after the lender has completed its normal recovery process can it claim under the Government guarantee. That process does not release the borrower from liability.
A director should therefore assess the downside exactly as they would with any other business loan.
Questions to ask before signing
- Is this definitely a Growth Guarantee Scheme facility?
- Which announced scheme terms are currently live with this lender?
- What is the total cost, including all fees?
- How has the Government guarantee affected the price or approval decision?
- What security is required?
- Is a personal guarantee required, and is it capped?
- Can the lender reduce or cancel availability?
- What information and covenant tests apply?
- What happens if trading gets worse?
- What events put the facility into default?
- Are there early-repayment, exit or termination fees?
- Would the lender offer a normal commercial facility on better terms?
- Does the term match the asset or cash-flow need?
- Is the funding suitable for growth, survival or both?
What lenders will check and why
The scheme does not bypass underwriting. The lender must still establish that the request is real, affordable, evidenced and repayable.
- Filed accounts and current management accounts.
- Business bank statements.
- Cash-flow forecasts and downside sensitivity.
- Purpose and evidence for the funding request.
- Existing debt, charges and security.
- HMRC position and creditor pressure.
- Customer and supplier concentration.
- Director, shareholder and Companies House information.
- Subsidy declarations and group structure.
- Fraud, identity and verification checks.
Most SMEs are honest. Proper checks protect the scheme from misuse and help keep support available for viable businesses. Clean records and transparent answers improve the quality of the application.
Final practical summary
The £6.5 billion expansion is positive. It should give accredited lenders more capacity and flexibility to support viable SMEs across the UK.
But the central rule has not changed: the guarantee protects the lender, not the borrower. The business remains fully liable and must pass normal credit checks.
Use the scheme as a route to appropriate funding, not as a reason to borrow. The right facility can help a business invest, grow and keep cash moving. The wrong one can still create security, guarantee and default risk.
FAQ
Does the Government pay 70% of the loan if the business fails?
No. The borrower remains 100% liable. The 70% guarantee is available to the lender after its normal recovery process.
Can a lender ask for a personal guarantee?
Yes, at the lender’s discretion. The scheme states that a principal private residence cannot be taken as security, but the guarantee still needs careful legal review.
Is the new £54 million turnover limit available now?
The increase has been announced, but the British Business Bank says lenders are operationalising the enhancements. Check the current live criteria with the accredited lender.
Sources and further reading
- British Business Bank — Growth Guarantee Scheme. Official scheme rules, products, eligibility, guarantee and borrower-liability explanation.
- British Business Bank — 12 July 2026 expansion announcement. Primary source for the £6.5bn uplift, estimated 33,000 businesses and announced changes.
This article reflects current Juno Funding editorial. Funding products, rates and lender appetite change frequently — figures are indicative only and should not be treated as advice.