The life of a business owner and entrepreneur can be challenging to say the least, growth can be challenging, and despite the best forecasts there is no guarantee of success. There will be times that no matter which strategy or scheme you utilise to steer business change and development in the right direction, it just doesn’t happen.

Often times it is not a skill issue, or even a market issue – it’s simply lack of available financing to put the plans into place. Thankfully, here at Pegasus we are specialists in finding the right solution that can make a large leap forward for your business.

Let us introduce you to the Growth Guarantee Scheme (GGS).

The success to the Recovery Loan Scheme, the Growth Guarantee Scheme is run by the government’s British Business Bank. It encourages lenders to finance small businesses that often lack security.  The scheme underwrites loans to provide a guarantee to the lender in the absence of collateral.This post is all about the specifics of the GGS and how you can use it to advance your business.

What is The Growth Guarantee Scheme

The Growth Guarantee Scheme is the new scheme of the UK government that was developed in the context of the Covid-19 outbreak. The scheme works as a form of warranty to lenders, ensuring they can give loans to small businesses at higher risk. This means that small businesses can secure the amount of capital required for growth and expansion even though they may not meet the standard requirements for a loan.

How Does the Scheme Work?

This growth guarantee scheme is easy to understand and hence can be implemented effectively. Here’s how it works:

1) Eligibility

Particularly, the scheme is open to businesses that have an annual turnover of up to £45 million per year.

2) Loan Application

Companies can approach the loan through any of the participating lenders of their preference.

3) Guarantee

The government then provides a guarantee to the lender, ensuring that the latter is paid up to 80% of the loan amount.

4) Loan Repayment

The business repays the borrowed capital and the agreed interest rate within the specific period, which is between three and five years.

Benefits of the Growth Guarantee Scheme

The growth guarantee scheme offers numerous benefits to small businesses, including:

• Access to Finance

It gives much-needed relief to small businesses that often find it difficult to seize new opportunities, hence spearheading growth.

• Risk Management

The lender benefits from this guarantee as it means that the government will take responsibility for the loans, thus helping to ensure that small businesses get approved for loans.

• Competitive Interest Rates

That way, lenders are willing to provide credit at a lower cost as it is guaranteed by the government; therefore, adverse credit rates make it easy for organisations to get credit.

• Flexibility

The scheme lets businesses borrow up to  £250,000, giving them the ability to fund new ventures, employees, or expansions.

How the Growth Guarantee Scheme Can Propel Your Business Forward?

If you are an owner of a small business and you are now dreaming of expanding and becoming a large company or developing your business, then the growth guarantee scheme will be a blessing to you. Some of the ways it can be useful are as follows:

Invest in New Technology

Employ the funding for the purchase of new technology or equipment to minimise waste and enhance output.

Hire New Staff

Hire new personnel, people work and add to the company’s ability to increase the volume of business.

Develop New Products or Services

One of the best strategies is research and development, whereby a business should come up with new products or services that will earn revenues and create growth.

The Bottom Line

The growth guarantee scheme can be viewed as a potent weapon for small business owners aiming at growth and expansion. The scheme eliminates some of the barriers that make it difficult for small businesses to access financing and also the risk associated with lending to small businesses and thus enables small businesses to grow as per their plans.

If you’re thinking of applying for a loan under this scheme or you are simply looking at funding solutions then get in touch! With over 600 different forms of funding available to us, we can find and apply the most suitable solution for your business.