What is the Growth Guarantee Scheme?

Cash flow feeling like a leaky boat? Struggling to keep up with expenses while opportunities wait on the horizon? Looking for new ways to finance a growth project but not sure where you start?

The new 2024 UK Growth Guarantee Scheme might be your ticket to smoother financial waters. 

This government-backed program makes it easier for UK small and medium-sized businesses (SMEs) to get the loans they need to grow and thrive, which you can think of as a boost for your business loan application. 

In this guide, I’m breaking down everything you need to know about the Growth Guarantee Scheme: what it is, the benefits, who’s eligible, and how to get in on the action. Whether you’re a startup ready to take off or an established business looking to level up, this scheme could make all the difference. 

Let’s get into it.

The UK Government is serious about helping businesses thrive, and the Growth Guarantee Scheme (GGS) is proof.

The Chancellor of the Exchequer unveiled it in the Spring 2024 Budget and aims to officially launch on July 1st, 2024 – a huge step towards bolstering Small and Medium-sized Enterprises (SMEs).

For those in the know, this is essentially a rebranding of the Recovery Loan Scheme (RLS), which replaced other initiatives like CBLIS and Bounce Back Loans.

So, what’s the big deal?

Well, the GGS works by giving lenders a 70% government guarantee on loans they give to SMEs. This guarantee makes lenders far more likely to approve your loan request, even if you don’t have perfect credit or a ton of collateral.

It’s basically the government saying to lenders, “Hey, we believe in this business, so you should too!” and indicates a steadfast commitment to supporting business growth and sustainability.

Okay, let’s get into the nitty-gritty: What makes the Growth Guarantee Scheme (GGS) tick?

First, the magic of the guarantee.

The star of this show is that 70% government guarantee on loans. Again, it’s a big thumbs up from the government on behalf of your business when taking out a loan. At the time of writing (April 2024), you’ll currently be eligible for up to £2 million in Great Britain and £1 million in Northern Ireland.

That’s a 70% guarantee on a loan up to £2 million.

And this is so much more than just a rebranding of old programs. The GGS is designed to help even more businesses than before, with an estimated 11,000 businesses expected to be helped between July 2024 and March 2026.

That’s thousands of businesses getting the funding they need to grow, thrive, and pivot in the post-pandemic world.

Key Features to Remember: Here’s the breakdown of what makes the GGS special:

• Less Risk, More Loans: The guarantee makes it less risky for lenders to say “yes” to businesses that might not have the perfect track record yet.
• No Surprises: This scheme picks up where the old ones left off, so businesses know what to expect.
• Open Doors: More businesses can get the funding they need, even if they don’t have a ton of assets.
• Protecting Your Home: A huge deal – you won’t have to put your house on the line to get this funding.

The bigger picture here is that this isn’t just about getting a loan. The GGS is about giving UK businesses the support to really take off and innovate. Over the years, many businesses find themselves in a kind of rut where they’re ticking over, making ends meet, or not feeling confident enough to do something new.

By making funding easier and more secure, the scheme is like a runway for growth!

Let’s dive into this a little more because while some of the surface-level benefits are pretty clear, there’s a little more going on here, and being aware of these benefits can help you make the most of what the CGS has to offer.

• Fuelling Your Growth: Need money to buy new gear, hire more people, or launch a new product? The GGS makes getting that funding way easier. This is your chance to turn those big plans into reality.
• Taking the Pressure Off: With the government backing your loan, lenders are less worried about risk. This means better interest rates and less hassle for you, even if your business is young or doesn’t have a ton of assets. This means a mitigation of the risk and worrying in the now and more focus on long-term sustainability.
• Building a Stronger Future: It’s more than just getting a loan today. Easier access to funding helps your business create jobs, try new things, and ride out the tough times. This isn’t just about your business – it’s about a stronger UK economy.

The best way to think of this is that the GGS gives you the tools to grow your business without the usual financial headaches. It’s about opening doors and creating a level playing field where great ideas can thrive.

To qualify for the Growth Guarantee Scheme (GGS), small and medium-sized enterprises (SMEs) in the UK must meet specific requirements designed to ensure that the scheme’s benefits reach the intended recipients efficiently and effectively. The eligibility criteria are as follows:

• UK Based: You have to be operating in the UK, and most of your income needs to come from business here. We’re talking 50% of your turnover derived from trading activities.
• The Right Size: Your business needs to make less than £45 million a year in turnover.
• Good Standing: You can’t be in the middle of bankruptcy or any similar financial trouble.
• Not for Everyone: Banks, insurers, public sector bodies, and most state-funded schools are not eligible. For individuals, only sole traders or partners in a partnership can apply.

If you’re a UK-based SME that’s financially healthy and looking to grow, there’s a good chance the GGS can help.

Okay, you’re excited about the GGS and think it might be a good fit. Here’s how to make it happen:

Step 1: Do Your Homework

Before diving in, make sure you fully understand the scheme. We’ve covered a lot in this guide, but there are plenty of other resources out there, too. The more you know, the smoother the process will be.

Step 2: Find Your Guide

Think of a broker as your personal navigator through the world of government-backed loans. A good broker, like the expert team here at Adept knows all the ins and outs of the GGS. 

We’ll help you find the best lender, get your paperwork in order, and basically make your life easier.

Step 3: Show Them What You’ve Got

Your loan application is your chance to shine. With your broker’s help, you’ll put together a package that tells lenders why your business is a good investment. This includes things like:

• Your Business Plan: Where are you headed, and how will you get there?
• Financial Forecasts: Show them you’ve thought about the numbers.
• The Impact: How will this loan help you grow, create jobs, etc.?

Step 4: Get The Green Light

If everything looks good, the lender will approve your loan. The GGS launches officially on July 1st, 2024, so you can start planning now to get ahead of the curve and make the most of this opportunity as soon as possible.

Now, remember, this isn’t about jumping through hoops. A good broker will be your partner, helping you put your best case forward and ensuring the GGS is the right solution for your business.

The Growth Guarantee Scheme isn’t just another loan program – it’s a springboard for ambitious UK businesses.

We’ve covered how it makes getting funding easier, reduces risk, and helps your business build a strong foundation for the future.

If you run an SME in the UK, this is something you need to be looking into. The eligibility requirements are clear, and the potential benefits are huge.

Don’t let this opportunity pass you!

Ready to learn more?

Visit the experts here at Adept Business Finance to see if the Growth Guarantee Scheme is the right fit for you.

We’ll guide you through the entire process and ensure your business gets the boost it needs to thrive.