British Business Bank launches Recovery Loan Scheme successor

Overview

The British Business Bank has introduced the Growth Guarantee Scheme, a new initiative running until 31 March 2026, designed to support small businesses by offering loans up to ￡2 million, with 70% of the loan amounts guaranteed by the government. This scheme succeeds the Recovery Loan Scheme and aims to help smaller businesses access much-needed finance.

Key Features

• Loan Amounts and Guarantees: Loans of up to ￡2 million with a 70% government-backed guarantee.
• Minimum Facility Sizes:￡1,000 for asset finance, invoice finance, and asset-based lending.￡25,001 for term loans and overdrafts.
• Facility Terms:Term loans and asset finance: 3 months to 6 years.Overdrafts, invoice finance, and asset-based lending: 3 months to 3 years.

Lender Participation

So far, 41 lenders have been accredited, with 20 currently open for applications. Lenders will offer a variety of finance types including term loans, overdrafts, asset finance, invoice finance, and asset-based lending.

Eligibility and Terms

• Borrower Liability: Borrowers remain 100% liable for the debt.
• Personal Guarantees: At the lender’s discretion; principal private residences cannot be taken as security.
• Previous Borrowers: Businesses with previous loans under other COVID-19 support schemes can still access this scheme, though it may affect the maximum eligible amount.

Expert Insights

• Reinald de Monchy, British Business Bank: The scheme is expected to stimulate sustainable growth and help smaller businesses scale up or maintain their market position.
• David Petrie, ICAEW: Welcomes the increased funding availability but cautions that businesses should not view this as an easy funding option and should prepare rigorous applications. He also highlights the importance of professional advice in exploring appropriate finance options.

About the British Business Bank

Established in November 2014, the British Business Bank aims to drive sustainable growth and support the transition to a net-zero economy by improving access to finance for smaller businesses. It also works to raise awareness of various finance options through the British Business Bank Finance Hub.

For accountants running their own practices, the Growth Guarantee Scheme offers a valuable opportunity to assist clients in securing funding to grow their businesses. Understanding the details and requirements of the scheme will enable you to provide informed advice and support to your clients in navigating this new financial resource.

Source: British Business Bank launches Recovery Loan Scheme successor | ICAEW