What Are Government-Backed Loans?

What a government-backed loan actually is

Despite the name, the Government doesn't lend you anything. The Growth Guarantee Scheme — GGS — is run by the British Business Bank on behalf of the UK Government, and it works quietly in the background: when an accredited lender gives you a loan, the Government guarantees 70% of it. That guarantee gives the lender the confidence to say yes more often.

The money itself comes from the lender, on the lender's terms — and you remain fully responsible for repaying every penny. The guarantee protects the lender, not you. What you get is access: funding that might otherwise have been declined.

GGS launched in July 2024 as the successor to the Recovery Loan Scheme, and it's open to viable UK businesses with turnover up to £45 million — which covers most of the businesses our clients buy.

The key points at a glance

If you're mid-search and short on time, this is the shape of it:

• —A 70% government guarantee to the lender — not money from the Government
• —Can fund business acquisitions and the working capital that comes with them
• —Designed for viable businesses that lack the security or collateral banks usually expect
• —Facilities up to £2 million per business group, subject to the scheme rules and the lender's own assessment
• —Covers term loans, asset finance, invoice finance and asset-based lending — for buying a business, term lending is usually the relevant one
• —Open now, with no fixed closing date announced — schemes like this evolve, so check availability when you apply

Why it matters when you're buying a business

Buying an existing, trading business is one of the harder things to finance through conventional lending. There's no new-build valuation to lean on, much of the value sits in goodwill and a lease, and the lender is being asked to believe in a track record built by someone else.

That is exactly the gap GGS exists to fill. When a strong buyer and a sound business don't quite fit a bank's standard template, the guarantee can give an accredited lender enough comfort to support the deal. It isn't a shortcut around the numbers — the business still has to be viable — but it is another route when the obvious one is closed.

Five funding problems it can solve

Finding the right business can take months of searching, viewing and negotiating. So when the funding wobbles late in the day, it's easy to assume the deal is dead. Often it isn't. These are the five hurdles buyers meet most often — and how they played out for real purchases:

The lender won't lend the full amount

A buyer purchasing a care home needed £840,500 to complete. Their bank would only go to £690,000 — a shortfall that would have sunk the deal. The application was taken to another GGS-accredited lender with a strong business plan, and the scheme supported the funding. The result: the acquisition completed.

The lender wants more security than you have

A buyer had found a profitable fast-food restaurant with a separate takeaway alongside it, but the lender's security requirements capped the borrowing short of what was needed. Rather than the buyer offering their home as security, the application moved to a GGS-accredited lender, and a GGS-backed loan formed part of the overall solution. The result: the acquisition completed.

The lender's valuation comes in below the price

A garage and MOT centre had an agreed purchase price — until the lender's valuation landed below it, opening a funding gap. GGS was built into a revised funding structure, and the application was resubmitted for reconsideration. The result: the acquisition completed.

The lender asks for a bigger deposit

A pub buyer had a solid contribution ready, but the lender required a deposit beyond what they could provide. An alternative GGS funding route was explored, and the acquisition was supported on a more workable basis. The result: the acquisition completed.

The business is too young for the lender

A healthcare business with less than two years' trading history gave the lender too little track record to rely on. A GGS-accredited lender whose appetite better suited the circumstances was identified, and the application was supported with the evidence needed to show the business — and the acquisition — was viable. The result: the acquisition completed.

Government-backed loans are available to businesses across the UK and are arranged through approved lenders on our panel. For buyers who need to top up their funding position or whose deposit is slightly short of what a standard lender requires, they can make the difference between a deal that works and one that doesn't.

The honest summary

Every acquisition is different, and GGS won't be the answer to all of them — eligibility, scheme rules and the lender's own judgement all apply. But if you're buying a business and conventional lending hasn't given you a straight answer, it's a route worth knowing about.

Structuring funding around problems like these is our day job. A first conversation is free — and always frank.

See how we help buyers of care homes, fast food takeaways, garages & MOT centres and pubs & bars.