Thousands more small businesses across the UK are set to gain easier access to finance after the government today (July 13) announced a major expansion of its flagship Growth Guarantee Scheme (GGS), alongside a wider package of measures designed to support innovation, exports and community lending.
Ahead of Chancellor Rachel Reeves' Mansion House speech on Tuesday (July 14), HM Treasury confirmed that the British Business Bank's Growth Guarantee Scheme will be significantly expanded, with the aim of unlocking an additional £2 billion in SME lending annually by 2028-29.
The gap between the SME demand for finance and the amount available is estimated to be between £1.6 billion to £4.1 billion per year. Improving this access is key to unlocking greater business investment, growth and productivity across the UK.
The centrepiece of plans revealed today is an expansion of the British Business Bank’s (BBB) highly successful Growth Guarantee Scheme (GGS) which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, cutting credit risk and turning ‘nos’ into ‘yeses’.
Since its launch in 2022, the scheme has delivered over £3.7 billion of financing to UK SMEs with £2.5 billion of this reaching businesses outside of London and the Southeast.
Every £1 spent on the scheme is estimated to support around £10 of lending by banks.
Expansion of the scheme has been one of the key priorities of SME trade bodies and the financial services sector ahead of Mansion House. The changes will mean;
- The scheme will scale up to facilitate an additional £2 billion of SME lending per year by 2028/29. This will bring the total SME lending supported through the scheme to £3.35 billion per year, more than double the current £1.35 billion.
- Increasing the maximum term length of a loan from six to 10 years for loans of up to £1.1 million.
- Increasing the maximum size of businesses that are eligible for a loan under the scheme from £45 million in annual turnover to £54 million.
- The BBB estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150% increase on the 8,000 currently being supported, bringing the total to 20,000.
Chancellor of the Exchequer, Rachel Reeves, said: "Our plan for the economy has put Britain on a stronger footing - restoring stability, getting investment flowing, and delivering reform.
"We know that small businesses are the backbone of this economy and growth in all our regions, and for too long they have heard ‘no’ when trying to raise the funds they need to grow and create jobs across the UK.
"When they succeed, we all succeed, and today’s major reforms are the most significant step in years to unleash their potential."
Business Secretary Peter Kyle said: "Today we’re putting our weight behind Britain’s entrepreneurs and innovators, unlocking billions in additional lending to help thousands more small businesses start, scale and succeed because access to finance should never be the barrier between a good idea becoming a great British business.
"Today’s expansion of the scheme’s funding is the most significant step in years to unlock finance for Britain’s small businesses with the further changes to the terms of the scheme improving the viability of guaranteed lending for firms who need longer term loans."