Scheme to improve access to finance for SMEs set for expansion

The British Business Bank’s Growth Guarantee Scheme is set to be scaled up to facilitate SMEs to borrow £3.35 billion per year by 2028/29 as part of plans to improve access to finance for small businesses.

The gap between the SME demand for finance and the amount available is estimated to be between £1.6 billion to £4.1 billion per year. Expansion of the Growth Guarantee Scheme, which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, is among measures to address this funding gap that will be announced by Chancellor Rachel Reeves ahead of her Mansion House speech on 14th July.

Since the Growth Guarantee Scheme launched in 2022, it has delivered over £3.7 billion of financing to UK SMEs with £2.5 billion of this reaching businesses outside of London and the Southeast. Expansion of the scheme will more than double the current £1.35 billion supported each year, and increase the maximum term length of a loan from six to 10 years for loans of up to £1.1 million.

Eligibility for the scheme will also be updated. The maximum size of businesses able to access government-guaranteed finance will rise to an annual turnover of £54 million, up to from £45 million.

The British Business Bank estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150% increase on the 8,000 currently being supported.

Alongside the expansion of the Growth Guarantee Scheme, the British Business Bank has also allocated £500 million from its ENABLE Guarantee programme to unlock lending to SMEs. The programme support innovative, high-growth firms across sectors such as creative industries and life sciences to secure the finance they need to commercialise ideas, invest and scale.

Launching in Spring 2027, a new portfolio guarantee scheme will be delivered jointly by UK Export Finance and the British Business Bank. The scheme is designed to increase the availability of finance for small and medium-sized businesses that want to begin or expand on sales overseas.

Welcoming the reforms to financing for SMEs, Martin McTague, National Chair of the Federation of Small Businesses (FSB), said:

“Access to finance is a fundamental need for small businesses looking to grow, so we are pleased to see our calls to amp up the British Business Bank’s Growth Guarantee scheme have been heard. Expanding resources and extending payment terms will help small businesses build wealth in every part of the country. Small firms need as many finance options available to them as possible right now.”

Shevaun Haviland, Director General of the British Chambers of Commerce, said:

“The Growth Guarantee Scheme has played a vital role in funnelling more money into our regional economies and helping SMEs across the UK to invest and grow.

“For too long we have lagged behind other G7 economies on access to finance and this new funding will bring us a step closer to parity. Our research shows that almost half of businesses think easier access to finance will support their expansion.”