British Business Bank launches scheme to help smaller businesses in the Midlands

Reinald De Monchy

The British Business Bank has released more details on the Growth Guarantee Scheme, the successor to the Recovery Loan Scheme.

The Growth Guarantee Scheme is designed to support access to finance for UK smaller businesses as they look to invest and grow.

It is expected to support around 11,000 smaller businesses between 1 July 2024 and 31 March 2026 and has so far accredited 41 lenders.

Following their accreditation, each lender needs to put in place the operations required to start lending under the scheme.

They will be listed on the British Business Bank website once they are ready to start receiving applications.

Currently, 20 lenders have confirmed they are open for applications and further lenders are going through the accreditation process and will be accredited over the coming weeks.

These lenders will provide a wide range of finance types to smaller businesses, including term loans, overdrafts, asset finance, invoice finance and asset-based lending.

The Growth Guarantee Scheme terms include:

Businesses can access up to £2m per business group, with the minimum and maximum amount of the facility varying according to the business’s circumstances and the type of facility.

Maximum facility sizes are up to £2m per business and minimum facility sizes start at £1,000 for asset finance, invoice finance, and asset-based lending and £25,001 for term loans and overdrafts.

The scheme supports a wide range of products, including term loans, overdrafts, asset finance, invoice finance and asset-based lending facilities. However, not all lenders will be able to offer all products.

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.

Businesses that took out a Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or a Recovery Loan Scheme (RLS) facility before 30 June 2024 are not prevented from accessing the Growth Guarantee Scheme, but borrowing under these schemes may reduce the maximum amount the borrower is eligible for.

Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal and the lender’s pricing will take into account the benefit of the government guarantee.

Personal guarantees can be taken at the lender’s discretion, in line with their normal commercial lending practices and Principal Private Residences cannot be taken as security within the scheme.

The scheme provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility after it has completed its normal recovery process.

The borrower always remains 100% liable for the debt and the Growth Guarantee Scheme-backed facilities are provided at the discretion of the lender and lenders are required to undertake their standard credit and fraud checks for all applicants.

Reinald de Monchy, managing director of guarantee and wholesale solutions at British Business Bank, said: “We’re excited to launch the Growth Guarantee Scheme, which will allow lenders to offer more finance to their customers. This will help to generate more sustainable growth across the UK and provide a springboard to many smaller businesses to scale up or stay ahead.”