The UK government has announced £500m in new funding to support innovative SMEs and scale ups grow, invest and create jobs across the country. The gap between the SME demand for finance and the amount available is estimated to be between £1.6bn to £4.1bn per year. The government says improving
Kirstie Pickering
The UK government has announced £500m in new funding to support innovative SMEs and scale ups grow, invest and create jobs across the country.
The gap between the SME demand for finance and the amount available is estimated to be between £1.6bn to £4.1bn per year. The government says improving this access is key to unlocking greater business investment, growth and productivity across the UK.
The new funding is an expansion of the British Business Bank’s Growth Guarantee Scheme (GGS), which provides a 70% government guarantee on commercial loans to SMEs of up to £2m. This will bring the total SME lending supported through the scheme to £3.35bn per year – more than double the current £1.35bn.
The British Business Bank estimates that 12,000 additional SMEs per year now will receive support accessing finance as the GGS expands significantly.
Since its launch in 2022, the scheme has delivered over £3.7bn of financing to UK SMEs, with £2.5bn of this reaching businesses outside of London and the South East.
The £500m funding announcement comes ahead of chancellor Rachel Reeves’ Mansion House speech tomorrow (Tuesday 14 July).
Expansion of the scheme has been one of the key priorities of SME trade bodies and the financial services sector ahead of Mansion House.
The changes will also increase the maximum term length of a loan from six to 10 years for loans of up to £1.1m, and increase the maximum size of businesses that are eligible for a loan under the scheme from £45m in annual turnover to £54m.
“Our plan for the economy has put Britain on a stronger footing – restoring stability, getting investment flowing, and delivering reform,” says Reeves.
“We know that small businesses are the backbone of this economy and growth in all our regions, and for too long they have heard ‘no’ when trying to raise the funds they need to grow and create jobs across the UK.”
