02 Sep The Growth Guarantee Scheme – What you need to Know.
The Growth Guarantee scheme has just (1/7/2024) been released by the British Business Bank and is essentially the latest iteration of the successful Recovery Loan Scheme.
The Scheme is designed to support UK SME businesses to access the finance they need to invest & grow by providing accredited lenders with a 70% Government – Backed Guarantee. As with the RLS Scheme and it’s predecessor the CBILS (Coronavirus Business Interruption Scheme) this will give lenders greater confidence in lending and should see easier access to funding for eligible UK SME’s
The scheme will support a wide range of lending products including Loans, Invoice Finance, Asset Finance and Asset based Lending and will support facilities up to £2m (£1m in Northern Ireland).
As with all lending, borrowers will need to demonstrate that they are able to afford any new debt and the scheme can be used for any legitimate business purpose.
Key Features:
Up to £2m per business group
The maximum amount of a facility provided under the scheme is generally £2m per business group. Minimum facility sizes vary, starting at £1000 for asset finance, invoice finance and asset-based lending, and £25,001 for term loans and overdrafts.
Wide range of products
GGS supports term loans, overdrafts, asset finance, invoice finance and asset-based lending facilities. Not all lenders will be able to offer all products
Pricing
Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal. The lender’s pricing will take into account the benefit of the Government guarantee.
Personal Guarantees
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
Key Eligibility Criteria
Turnover Limit
The scheme is open to smaller businesses with a turnover of up to £45m
UK-based
The borrower must be carrying out trading activity in the UK and, for most businesses, generating more than 50% of its income from trading activity
Subsidy Limits
Borrowers will need to provide written confirmation that receipt of the GGS facility will not mean that the business exceeds the maximum amount of subsidy they are allowed to receive. All borrowers in receipt of a subsidy from a publicly funded programme should be provided with a written statement, confirming the level and type of aid received
Viability test
The lender must consider that the borrower has a viable business proposition
Business in difficulty
The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings