Discover how to use the UK Government’s Growth Guarantee Scheme (GGS) to refinance existing debt and unlock capital. Expert insights from David Farmer of Lime Finance Solutions on eligibility, demand, and how to secure funding until 2030.
In the current economic climate, “defensive debt management” isn’t just a buzzword – it’s a survival strategy. Well, actually it is a buzzword but I quite like it so it is staying in!
At Lime Finance Solutions, we are seeing a sizable shift in how SMEs are approaching their existing liabilities.
That passive, wait it out and slowly repay the borrowing days, those appear to be behind us. SMEs are now looking for efficiency and to structure their borrowing to suit them now, recognising that what suited them when they took out the borrowing isn’t necessarily the same thing.
With the Bank of England base rate having reduced but now looking at stalling, business costs remain a primary concern for over80% of UK firms. With NI and PAYE rises, rent and rates normally outside of the SME’s control, the ability to refinance existing debt into more manageable, government-backed facilities is something worth exploring.
Enter the Growth Guarantee Scheme (GGS, because in finance everything needs to be an acronym!).
The Growth Guarantee Scheme is the official successor to the Recovery Loan Scheme (RLS). Launched in July 2024 it is designed to support access to finance for UK businesses.
The core of the scheme is a 70% government-backed guarantee provided to lenders. It is essential to remember that the borrower remains 100% liable for the debt – the Government guarantee is to the lender, not the borrower; however, this guarantee encourages lenders to approve facilities that might otherwise fall just outside their standard criteria. This means the classic ‘grey zone’ applications that lenders view as borderline approve or decline (read, it’s sunny and you make get approved, rainy and there’s no chance).
The key details?
Yes. This is one of the less understood, and most underutilised features of the GGS.
Refinancing borrowing isn’t always the answer, but where eligibility exists, it can often really help move your borrowing from what was working ‘then’ to what works ‘now’. The ability to refinance existing borrowing.
Whether you are looking to consolidate high-interest short-term debt, move away from a lender that no longer fits your needs, or simply reduce your monthly commitments to protect cash flow, the GGS may offer you a way forward.
“We often see businesses that are profitable but unable to move forward, that’s either due to being cash poor or simply not having the spare capital – and yes, they are different things'” says David Farmer, founder of Lime Finance Solutions. “By using the Growth Guarantee Scheme to refinance, you are leveraging a government-backed scheme for your benefit. If it helps keep your capital inside your business – where it can generate growth – that has to be good.”
Demand for GGS should be high. If it had greater profile it may well be:
The figures suggest a demand for the growth guarantee scheme, our experience matches that. The GGS isn’t perfect and isn’t a panacea to obtain borrowing – it is a good scheme that provides support and is still well underused.
We are seeing a big demand for commercial mortgage borrowing using the GGS scheme. This appears to tie in with commercial landlords looking to sell and trading businesses wanting to secure their premises.
In short, providing you are borrowing for a viable business purpose, that is within the scope of your business then you should be fine. You can’t use GGS for investment property, you can use it to buy your own trading premises – you get the gist.
Any questions, or if you want to explore how GGS could benefit you then let’s have a conversation.
No. If you took out a Coronavirus Business Interruption Loan (CBILS), Bounce Back Loan (BBLS), or Recovery Loan (RLS) before June 2024, you can still apply for growth guarantee scheme (GGS). Bear in mind this may change your affordability, however it doesn’t change whether you’re eligible. The good part is most CBILS and BBLS borrowing is nearing maturity anyway so there is often a workaround.
No, no and no. It is a commercial loan or facility that you are 100% responsible for. The guarantee part is from Government to lender, it is there to encourage lending to the SME sector.
This is at the lender’s discretion and follows their standard commercial practices. However, your home cannot be taken as security under the GGS.
The scheme is open to UK-based businesses with an annual turnover of up to £45 million. There is no formal bottom turnover limit
Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.
Tel: 01293 541333
Email: hello@lime-fs.com
Tel: 0207 866 2102
Email: hello@lime-fs.com
Tel: 01293 541333
Email: hello@lime-fs.com
Tel: 0207 866 2102
Email: hello@lime-fs.com
ICO registration Z3450620 and you can check via ico.org.uk
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