Growth Guarantee scheme (ggs)

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How The Growth Guarantee Scheme (GGS) Works

The Government-backed Growth Guarantee Scheme (GGS) is designed to help UK-based small businesses access vital funding by reducing the risk for lenders. Eligible businesses can borrow up to £2 million, with the government providing a guarantee to the lender for up to 70% of the loan amount. This government guarantee helps make it easier for lenders to offer finance to small businesses by reducing their risk in case the business cannot repay the loan. However, it is important to note that while the government offers this support to the lender, the business remains fully responsible for repaying the entire loan.

A key feature of the Growth Guarantee Scheme is its flexibility. Businesses can access a wide range of finance types, including term loans, overdrafts, asset finance, and other forms of credit. The funding can be arranged for terms ranging from as short as three months to as long as three years, providing options that suit various business needs.

To qualify for the GGS, businesses must meet certain criteria. The scheme is intended for small businesses with an annual turnover of no more than £45 million. Additionally, the business must generate at least 50% of its income from trading activity rather than from investments or other non-operational sources. The business must also be considered viable by the lender, meaning the lender believes the company has a sound business plan and is likely to succeed.

It is important that the business is not in financial distress at the time of application. Companies undergoing insolvency proceedings or facing severe financial challenges are not eligible for the scheme. Moreover, businesses must ensure that by taking a loan under the GGS, they do not exceed the maximum subsidy allowance as outlined in the scheme’s regulations.

In summary, the Government-backed Growth Guarantee Scheme is a powerful tool for small UK businesses seeking financial support. It helps reduce the lender’s risk while offering businesses a range of financing options, though businesses remain fully liable for repayment.

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