The Ultimate FAQ: Government Backed Business Loan Explained

Ever feel like growing your business is a bit like trying to scale Mount Everest in flip-flops? 

You’ve got the ambition, the drive, but maybe not quite the right gear or resources to get to where you want to go.

That’s where funding comes in – the sturdy boots and crampons of the business world.

But let’s face it, securing traditional loans can feel like an uphill battle. Credit scores. Asset collateral. Tons of paperwork. It can feel like more hassle than it’s really worth.

I’m here to tell you there is a viable alternative: a government backed business loan. 

They’re like having the government sherpa alongside you, easing the burden and making that summit seem a little less daunting. That’s what we’re talking about today, detailing what these are and whether these loans are right for you.

Let’s go.

A government backed business loan, or GBLs, are simply loans in the traditional sense, but they’re backed by, well, the UK government.

The backing part gives you more freedom to apply and makes it easier for you to qualify for higher amounts of funding. In a worst-case scenario where you’re unable to make or keep up with payments (either permanently or temporarily), the government has your back.

Thus, lenders see less risk in your loan and are happier to give you the business financing you’re looking for.

Think of them as having a little extra oomph and accessibility.

Here’s the deal: the government basically acts as a co-signer on your loan, promising to cover a portion of it if your business stumbles. This magic trick makes lenders more likely to approve your application and, often, at lower interest rates. 

It’s like having a VIP pass to the funding party.

Applying for a government backed business loan might sound intimidating, but it’s not as complicated as navigating a maze of red tape (though a little paperwork is involved).

First, you’ll need to check if you meet the eligibility requirements. 

These usually include things like your business size, industry, and financial health. It’s like trying to join an exclusive club – there are some entry rules. These depend on the loan you’re applying for (which we’ll get into shortly)

If you make the cut, you’ll fill out an application (yes, there’s always an application), gather some documents, and then wait for the lender and the government to assess your proposal.

Once approved, you’ll receive the funds and start repaying the loan according to the agreed-upon schedule. 

A government backed business loan is pretty much that simple.

A government backed business loan isn’t a one-size-fits-all solution. They’re more like a tailor-made suit, crafted for specific businesses, and depend on the type of loan you’re after.

For example, you may opt for a loan for a specific project you’re working on or to get your start-up off the ground. There’s a different loan for each.

Startups, growing businesses, and even those with a few bumps in their credit history can potentially benefit from a government backed business loan. Generally speaking, if you’ve got a solid business plan and a burning desire to grow, these loans might be right up your alley.

But before you start dreaming of champagne showers and corner offices, it’s important to be realistic. A government backed business loan isn’t free money but investments in your business’s future. So, make sure you can handle the responsibility of repayment.

Alright, let’s get down to brass tacks and talk about the actual government-backed loan schemes available to you right now in the UK (2024).

Growth Guarantee Scheme

Running from June 2024 until 2026, the Growth Guarantee Scheme is the replacement government backed loan scheme for CBLIS, BBLS, or RLS. Eligibility requirements include:

• Less than £45 million in turnover
• Trading in the UK for under 2 years
• Be a limited company
• Use the loan for a business purpose
• Not be in difficulty or have any collective insolvency proceedings ongoing

Start Up Loan

If you’re starting or growing a new business in the UK, you can apply for a government-backed Start Up loan between £500 and £25,000. 

This is actually classed as an unsecured personal loan, so it will be connected to you as an individual and you’ll need to pass a credit check to qualify. You’ll need to pay back a fixed rate of 6% per year, repayable over a one to five-year period.

First Enterprise – Enterprise Loans

First Enterprise is a government backed business loan specifically for start-ups and growing businesses, but only available to businesses in the East or South East Midlands area.

Don’t worry if these sound a little confusing, you’re not sure which is right for your business, or you’re looking for more options; there are a few.

Just remember each scheme has its own eligibility criteria and terms, so it’s important to do your research and find the one that fits your business like a glove. 

It’s a bit like shopping for the perfect pair of jeans – you want a good fit, but you also want something that looks great on you.

To help make this selection process quick and easy, get in touch with our experts here at Adept Business Finance. We have our finger on the pulse of all the UK loan trends and opportunities, so you can come to us, and we’ll share everything you need to know right off the bat.

Cut the research time and worry and instead enjoy the right financing as and when you need it.

And there we are the summit of today’s guide. 

Alright, business brainiacs, we’ve reached the summit! We’ve scaled the mountain of government-backed business loans, taking in the breathtaking views of funding opportunities and growth potential.

You now know what government backed business loans are, how they work, who they’re a perfect fit for, and your best options in 2024.

But, of course, new schemes and government backed business loan programs could be released at any time, so keep checking back to see what options could suit you.

Need a seasoned guide for your funding journey?

Talk with one of our experts for all your business financing needs. Our experts will help you navigate the terrain, conquer those challenges, and reach new heights of financial success.

Don’t wait – kickstart your journey today.