Before You SignWhat business finance actually costs, in the UK and the US

"Government-backed" means the lender is covered, not you

Both the UK and the US run schemes where the state guarantees part of a business loan. In both, the guarantee is given to the lender, not to you. The British Business Bank's own page puts it in one sentence: "The borrower always remains 100% liable for the debt."

Written by Kaz · Sources re-read 6 September 2026 · Page revised 13 October 2026 · What changed · How figures are checked

What the guarantee buys you is access. A lender that would decline an unguaranteed application may approve one where the state carries most of the loss if the business fails. What it does not buy is any reduction in what you owe: the loan is repaid in full, by you, on the lender's terms.

The UK: the Growth Guarantee Scheme

The British Business Bank describes the scheme in terms that leave no room for interpretation. It "provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility." And: "The borrower always remains 100% liable for the debt."

The scheme is open to smaller businesses with a turnover of up to £45m on a group basis. The facility size is up to £2m per business group for borrowers outside the scope of the Northern Ireland Protocol, and up to £1m per business group for Northern Ireland Protocol borrowers.

Two further lines on the same page matter more to a director than the headline 70%. "Personal guarantees can be taken at the lender's discretion, in line with their normal commercial lending practices." So a scheme facility can still come with your personal guarantee attached, and the state guarantee sits behind the lender, not in front of you. The one hard limit is on security: "Principal Private Residences cannot be taken as security within the Scheme." That protects your home from being charged as collateral for the facility. It does not cap what the lender can pursue under a personal guarantee.

How long it runs, and what is changing. The scheme was extended until 31 March 2030 at the 2025 Spending Review. On 12 July 2026 the British Business Bank welcomed an announcement of further capacity — "unlocking a further £6.5bn of market lending over the next four years" — together with "facility terms up to ten years for Term Loans and Asset Finance" and a turnover eligibility limit rising from £45m to £54m. As of 13 October 2026 those are announced enhancements, not the terms on offer: the scheme page says it "remains fully operational under the existing terms" through accredited lenders. A quote that relies on a ten-year scheme term or a £54m limit is relying on the announcement, and only the accredited lender can say which terms apply to a given application.

What the guarantee does What it does not do
Covers the lender for 70% of the outstanding balance Cover you for anything
Makes approval more likely for a business without a track record Reduce what you owe if the business fails
Stops the lender taking your home as security for the facility Remove the personal guarantee the lender may still take

The US: the SBA guarantee

The mechanism is the same. For most 7(a) loans the SBA "guarantees up to 85% of loans of $150,000 or less, and up to 75% of loans above $150,000"; SBA Express carries a 50% guarantee and is capped at $500,000, and the maximum 7(a) loan is $5 million. The guarantee is to the lender. The SBA's own page tells borrowers that "you will always work directly with your lender and not with SBA", and that most 7(a) term loans are repaid in monthly installments from the cash flow of the business. Nothing in that describes a loss shared with you.

The guarantee also has a price. The SBA publishes the amount of the upfront fee and the lender's annual service fee each fiscal year, for all loans approved during that year, through an Information Notice. For fiscal year 2026 that is Information Notice 5000-872051, 7(a) Fees Effective October 1, 2025 for Fiscal Year 2026, issued 28 August 2025.

Who carries each fee is set out by SBA rather than negotiated. Lenders must pay the upfront fee and "are permitted to pass the cost of the fee on to the borrower". Lenders must also pay the annual service fee, and that one "cannot be charged to the borrower". So one of the two can legitimately appear in your costs and the other cannot. An annual service fee itemized on a borrower's statement is a line to query, because SBA says it does not belong there.

What we do not re-key

We name the FY2026 notice rather than reprinting its fee percentages. The schedule is tiered by loan amount and maturity, it is replaced every fiscal year, and a percentage copied into an article is wrong the moment the next notice lands. The reliable check is the notice itself, by number, at the tier that matches your amount and maturity — not a comparison article, including this one.

Why this matters to the arithmetic

A borrower who believes the guarantee covers the downside accepts a larger facility than the business can carry, because the downside feels shared. It is not shared. A guaranteed facility is sized the same way as an unguaranteed one: by what operating cash can repay if the optimistic case does not happen.

The guarantee changes the lender's answer to "will you lend". It does not change your answer to "can I repay".

How to read a scheme-backed offer

Does the offer say the government guarantees part of the loan?
Yes → Ask who the guarantee is given to. The answer is the lender
No → Price it as an ordinary facility
Are you also being asked for a personal guarantee?
Yes → The state guarantee has not removed your personal exposure. Read the guarantee guide
No → Get the absence confirmed in the facility letter, not in conversation
Is there a fee for the guarantee, and who pays it?
Borrower pays → Add it to total cost before comparing with a non-scheme offer
Lender pays → Ask whether it is priced into the rate instead

The 70% figure and the 100% liability wording are the British Business Bank's own. The US percentages are from SBA's 7(a) program pages.

What this means for your decision

If you are a UK business with turnover up to £45m that has been declined on a conventional facility, the Growth Guarantee Scheme is worth asking about by name — it exists precisely for the case where the lender's risk appetite is the obstacle.

If you are comparing a scheme-backed offer against a conventional one, the comparison is on total cost, including any guarantee fee passed to you, and on the guarantee wording. The word "backed" tells you nothing about your position.

If a broker tells you the government stands behind your loan, that is true of the lender's position only. Your liability is set out in the facility letter and in any personal guarantee you sign, and those are the documents the lender enforces.

When this scheme is not worth chasing

If you would be approved on a conventional facility at a comparable total cost, the scheme route usually adds paperwork without adding benefit to you — the benefit accrues to the lender. And if your constraint is repayment capacity rather than approval, a scheme that makes approval easier is solving the wrong problem.

This page is part of business finance in the United Kingdom, where the rest of the UK material on this site is collected.

Sources

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What changed on this page

6 September 2026 Correction — The Growth Guarantee Scheme now carries its end date, and a clear line between the terms operating today and the expansion announced on 12 July 2026, which has not yet reached the scheme rules.

The whole change log