When a lender uses GGS
Accredited lenders should only offer finance through GGS if they are unable to offer a facility on equivalent terms without the guarantee. If a lender can offer a commercial facility on better terms than a GGS-backed one, it will do so. The scheme aims to give lenders greater certainty over credit risk, so they can lend to more viable smaller businesses they would not otherwise consider.
Every facility, including a GGS-backed one, is provided at the lender's discretion, after its standard credit, fraud, anti-money laundering and know your customer checks.
What does not change
The government gives the lender a 70% guarantee on the outstanding balance of the facility, and your business remains 100% liable for repaying it. A lender can still take security and, if it normally does, a personal guarantee, but not your principal private residence.
Interest rates and fees are set by the lender and vary with the proposal.
What does change
A GGS facility counts as a subsidy, so previous subsidy can reduce what you can borrow. Facilities are capped at £2 million per business group, with lower limits for some Northern Ireland borrowers. GGS also has eligibility rules, such as the £45 million turnover limit and the 50% trading test, that an ordinary loan may not.
See the GGS eligibility criteria.
Price an ordinary business loan with the business loan calculator.
QUESTIONS
Growth Guarantee Scheme vs a commercial business loan: questions
Is a GGS loan cheaper than a commercial loan?
Not necessarily. Lenders set the rate, and they must pass on the economic benefit of the guarantee after their costs. Compare quotes.
Do I owe less because of the guarantee?
No. The business remains 100% liable.
Why would a lender offer GGS?
Lenders should only offer it if they cannot provide a facility on equivalent terms without the guarantee.