Government-backed schemes

What government-backed finance is

The UK government supports lending to smaller businesses in two ways:

• Guarantees to lenders. A lender lends in the usual way, and the government covers part of its loss if the loan goes wrong. The Growth Guarantee Scheme, the ENABLE programmes and UK Export Finance guarantees work like this.
• Direct and fund-based lending. Start Up Loans, the British Business Bank’s Nations and Regions Investment Funds and the National Housing Bank lend or invest through their own programmes.

The guarantee protects the lender, not you. Under the Growth Guarantee Scheme, The borrower always remains 100% liable for the debt.

How to work out the cost of a government-backed loan

1. Enter the facility. Use the amount the lender has offered under the scheme.
2. Enter the lender’s rate and fee. Rates vary by lender. Upfront fees under the Growth Guarantee Scheme are capped at 5%.
3. Choose the term. Up to six years for term loans under the current rules.
4. Compare with a commercial loan. Lenders should offer a commercial facility instead if its terms are better, so compare both.

When businesses use these schemes

Government-backed finance is for viable businesses that a lender would not otherwise fund on acceptable terms, for example because there is not enough security or trading history. The Growth Guarantee Scheme can be used for any legitimate business purpose including, but not limited to, managing cashflow, or investment and growth purposes.

Commercial lending comes first. The British Business Bank says that If a lender can offer a commercial facility on better terms than a GGS-backed facility, they will do so.

The schemes at a glance:

• Growth Guarantee Scheme (GGS): term loans, overdrafts, asset finance, invoice finance and asset-based lending from accredited lenders. It is Open for applications.
• Start Up Loans: personal loans for people starting or running a young business.
• Nations and Regions Investment Funds: loans and equity from British Business Bank funds in each part of the UK.
• UK Export Finance (UKEF): guarantees to banks for exporters’ working capital, trade facilities and bonds.
• Property and housebuilding: the National Housing Bank and ENABLE Build; see development finance.

How much you can borrow

Growth Guarantee Scheme. Facilities are generally £2m per business group for borrowers outside the scope of the Northern Ireland Protocol, and up to £1m per business group for Northern Ireland Protocol borrowers, starting at £1,000 for asset finance, invoice finance and asset-based lending, and £25,001 for term loans and overdrafts. The British Business Bank says the Scheme has delivered £3.7bn to UK businesses via 70 accredited partners.

Start Up Loans are £500 to £25,000. The average loan amount is £10,264.

Nations and Regions Investment Funds. The Northern Powerhouse Investment Fund II is a £660 million commitment, offering smaller loans and debt finance from £25,000 to £2 million and equity investment up to £5 million. The Midlands Engine Investment Fund II has £400 million of new funding, and the South West Investment Fund a £200 million commitment. There are also funds for Wales (A £130 million investment fund), Northern Ireland (Around £100 million investment fund) and Scotland (A £150 million investment fund).

UK Export Finance. The General Export Facility gives trade finance facilities up to £25 million. The Export Development Guarantee is for larger needs: UK Export Finance says it can consider transactions from a minimum of £25 million. For export working capital, There is no minimum or maximum value for the working capital facility.

Terms, and the changes announced in July 2026

Growth Guarantee Scheme: the current rules. Term loans and asset finance facilities are available from three months up to six years, with overdrafts, invoice finance and asset based lending available from three months up to three years. The scheme is open to smaller businesses with a turnover of up to £45m (on a group basis, where part of a group).

Changes announced on 12 and 13 July 2026. HM Treasury announced an expansion of the scheme: Increasing the maximum size of businesses that are eligible for a loan under the scheme from £45 million in annual turnover to £54 million, and Increasing the maximum term length of a loan from six to 10 years for loans of up to £1.1 million. The British Business Bank says it is working with accredited lenders to operationalise these enhancements, and that the scheme remains fully operational under the existing terms until then. Check with the lender which terms cover your facility.

Start Up Loans run for 1 to 5 years. UK Export Finance: the General Export Facility has maximum repayment terms of up to 5 years; the Export Development Guarantee covers a maximum repayment period of up to 5 years, or up to 10 years if the loan is to develop clean growth exports such as renewable energy.

What it costs

Growth Guarantee Scheme. The scheme does not set rates. Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal, and the lender’s price takes into account the guarantee and the fee it pays for it. lenders are required to pass on the economic benefit of the guarantee to your business after accounting for its costs in using the scheme, and upfront fees, including broker fees, are capped at a maximum of 5%. As a benchmark, the Bank of England reports that the effective interest rate on new loans to SMEs increased to 6.63% from 6.61% in August 2026.

Example A £500,000 loan at 10% over 72 months costs about £9,263 a month and about £166,930 in total interest, plus a £10,000 fee at 2%. Over 120 months, once the ten-year change is live (loans up to £1.1m only), it would be about £6,608 a month and about £292,904 of interest.

Start Up Loans are personal loans with a fixed interest rate set by the scheme, with no application or early repayment fee. Check the current rate and the representative example on gov.uk.

UK Export Finance charges the bank a guarantee fee, which UKEF does not publish. For the General Export Facility, This fee is a proportion of the interest margin paid by the UK exporter to the bank for providing the facility.

Regional funds are priced by their appointed fund managers, who do not publish standard rates.

Security and personal guarantees

Under the Growth Guarantee Scheme, lenders use their normal security and covenants. Personal guarantees can be taken at the lender's discretion, in line with their normal commercial lending practices. Principal Private Residences cannot be taken as security within the Scheme. Lenders are allowed to take personal guarantees for facilities of all sizes if that is their usual practice.

The British Business Bank’s own example shows how the guarantee works for the lender: Business borrows £1m facility with a £100,000 personal guarantee; Business pays off £400,000 then defaults, owing £600,000; Lender recovers £100,000 from other secured business assets. After the £100,000 personal guarantee is called, the lender’s initial loss is £400,000; it can claim for 70% of this loss (£280,000) under the guarantee, and bears the remaining £120,000. You, and any guarantor, still owe the debt.

Start Up Loans are different: Unlike a business loan, this is an unsecured personal loan. You'll need to pass a credit check. You are personally liable.

Who qualifies

Growth Guarantee Scheme (current rules). Your business must be carrying out trading activity in the UK, have group turnover of up to £45m, pass the lender’s viability test, not be a business in difficulty, and be within subsidy limits. The announced rise to £54m is not live until the lender confirms it. Some sectors are excluded, including Public-sector bodies; State-funded primary and secondary schools; Banks, building societies, insurers and reinsurers (excluding insurance brokers). Start-ups can qualify at the discretion of the lender. Lenders typically ask for Management accounts, a Business plan, Historic accounts, Details of assets and Details of previous subsidy awards.

Start Up Loans. You must live in the UK, be 18 or over, and have (or plan to start) a UK-based business that's been fully trading for less than 5 years. successful applicants get up to 12 months of free mentoring.

UK Export Finance. For the General Export Facility, in any one of the last three financial years, at least 20% of their annual turnover has been made up of UK export sales, or at least 5% in each of the last three years. Export working capital support needs a business carrying on business in the UK, Isle of Man or Channel Islands with an export contract.

Who provides it

• Growth Guarantee Scheme: accredited lenders, which range from high street and challenger banks to asset-based and specialist local lenders. The British Business Bank lists them on its scheme page. Not all lenders will be able to offer all products.
• Start Up Loans: through the Start Up Loans service, a British Business Bank subsidiary, and its delivery partners.
• Nations and Regions Investment Funds: fund managers appointed by the British Business Bank (fund list).
• UK Export Finance: your bank or trade finance provider, with UKEF behind it. UKEF’s aim is that no viable UK export fails for lack of finance or insurance. A new joint British Business Bank and UKEF scheme is Expected to launch in Spring 2027.
• Other programmes: ENABLE for IP-rich businesses (up to £500m of existing ENABLE Guarantee capacity), and ENABLE Build and the National Housing Bank for housebuilders.

Lenders listed in our lender directory are not endorsements, and inclusion does not mean a lender will offer you credit.

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