Government-Guaranteed Growth: The GGS Explained
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Small and medium-sized enterprises (SMEs) often find it challenging to secure the funding needed to fuel their growth and innovation. The UK Growth Guarantee Scheme (GGS) is a government program that addresses this challenge by providing businesses a lifeline to scale their organisation.
Launched in July 2024 and running until March 2026, the GGS offers a 70% government guarantee on loans of up to £2 million for businesses in Great Britain.
By reducing risk for lenders, the scheme encourages them to offer more favourable terms, such as lower interest rates and longer repayment periods, making it easier for businesses to secure the funding they need. This increased access to finance can be a game-changer, enabling SMEs to invest in their future and drive economic growth.
With a network of 41 accredited lenders British Business Bank, the GGS offers a wider range of businesses access to capital. Whether you're looking to expand your operations, invest in new technologies, or improve your cash flow, the GGS can provide the financial support you need to achieve your goals.
What is the Growth Guarantee Scheme?
The Growth Guarantee Scheme (GGS) is a government-backed initiative designed to facilitate lending to UK businesses by providing lenders with a government guarantee against potential losses.
How Does the Growth Guarantee Scheme Work?
Many businesses find it difficult to get loans because of strict lending criteria, high interest rates, a lack of collateral. The Growth Guarantee Scheme offers a practical solution that benefits both the lender and the borrower.
- The Guarantee: The GGS provides a guarantee to lenders, typically banks and other financial institutions, for a portion of the loan they extend to an eligible SME. This guarantee acts as a safety net, reducing the lender's risk and encouraging them to offer more competitive rates and terms.
- Scheme Eligibility: The Growth Guarantee Scheme is accessible to various business structures, including sole traders, limited partnerships, and corporations. To qualify for a GGS-backed loan, a business must meet certain criteria, such as:
- Being based in the UK
- Having a turnover of less than £45 million per year
- Generating more than 50% of its total turnover from trading activity
- Being financially healthy and not in distress
- Ensuring the loan won't exceed government support limits
- Loan Terms: The specific terms of a GGS-backed loan will vary depending on the lender and the borrower's individual circumstances. Term loan facilities may be obtained for periods ranging from three months to six years:
- Asset finance facilities are available for terms of up to six years
- Overdrafts and invoice finance facilities are available for terms of up to three years
Benefits of the Growth Guarantee Scheme
The Growth Guarantee Scheme plays an important role in supporting the growth and development of UK small businesses by increasing the availability of finance for businesses. This can be particularly beneficial for early stage businesses, as well as those growing quickly or operating in sectors that often face challenges in meeting traditional lending criteria.
How can the GGS benefit your business?
- Enhanced Access to Finance: The GGS can help you secure funding when traditional lenders may be hesitant.
- Business Growth and Expansion: Use the funds to expand your operations, hire new staff, develop new products or services, or invest in marketing and advertising.
- Improved Cash Flow: Bridge temporary cash flow gaps or manage unexpected expenses.
- Equipment and Asset Purchases: Invest in essential equipment and assets to boost productivity and efficiency.
- Strategic Initiatives: Fund specific projects or initiatives that align with your long-term business goals.
The Growth Guarantee Scheme plays a vital role in supporting the growth and development of small and medium-sized enterprises. By providing a guarantee to lenders, the GGS helps to ensure that SMEs have access to the finance they need to succeed. If you're an SME looking to expand your business, it's worth exploring whether you might be eligible for a GGS-backed loan.
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