Local Support, International Reach
The changes will help businesses grow, invest and create jobs across the country, and come ahead of the Chancellor’s Mansion House speech on Tuesday. It delivers on the government’s commitment to make the UK the best place to start and grow a business – ensuring that hard work and ambition are met with the finance to match.
The gap between the SME demand for finance and the amount available is estimated to be between £1.6 billion to £4.1 billion per year. Improving this access is key to unlocking greater business investment, growth and productivity across the UK.
The centrepiece of plans revealed today is an expansion of the British Business Bank’s (BBB) highly successful Growth Guarantee Scheme (GGS) which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, cutting credit risk and turning ‘nos’ into ‘yeses’.
Since its launch in 2022, the scheme has delivered over £3.7 billion of financing to UK SMEs with £2.5 billion of this reaching businesses outside of London and the Southeast.
Every £1 spent on the scheme is estimated to support around £10 of lending by banks.
Expansion of the scheme has been one of the key priorities of SME trade bodies and the financial services sector ahead of Mansion House, and this government has listened to these calls and acted. The changes will mean;
“Our plan for the economy has put Britain on a stronger footing – restoring stability, getting investment flowing, and delivering reform.
“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.
“When they succeed, we all succeed, and today’s major reforms are the most significant step in years to unleash their potential.”
“Today we’re putting our weight behind Britain’s entrepreneurs and innovators, unlocking billions in additional lending to help thousands more small businesses start, scale and succeed because access to finance should never be the barrier between a good idea becoming a great British business.
“Today’s expansion of the scheme’s funding is the most significant step in years to unlock finance for Britain’s small businesses with the further changes to the terms of the scheme improving the viability of guaranteed lending for firms who need longer term loans.”
Beyond the expansion of GGS, the BBB has also allocated £500 million of the financial capacity within its ENABLE Guarantee programme to unlock lending to SMEs and scaling firms that are rich with innovative intellectual property (IP).
IP-rich SMEs often find it difficult to access finance than firms with physical assets such as property, and the new allocation will support innovative, high-growth firms across sectors such as creative industries and life sciences to secure the finance they need to commercialise ideas, invest and scale.
This will strengthen the UK’s innovation ecosystem and help boost the UK’s AI sovereignty, a key tenet to achieve growth set out by the Chancellor in her Mais lecture earlier this year.
The government is also reaffirming its commitment to the community finance sector, recognising the important role Community Development Finance Institutions (CDFIs) play in supporting businesses and entrepreneurs who may struggle to access mainstream finance.
In February, the government launched the Community Finance Taskforce, bringing together banks, community finance lenders, and government, to strengthen small business finance in partnership. This is already bearing fruit, and supporters, including JPMorganChase, have now committed a total of £10 million of philanthropic funding, alongside financial support from the US bank BNY, to build the operational capacity of the community finance sector.
The Taskforce will publish a Roadmap early next year, setting out a clear plan to strengthen funding for community development financial institutions (CDFIs), their resources and capability, and signposting small businesses that had been turned down for credit to potential CDFI lenders. Collectively, these efforts seek to unlock an additional £1 billion of SME lending over the next five years, accelerating the growth of a vital sector supporting businesses across the UK.
Significant progress has also been made through the British Business Bank’s Community ENABLE Funding programme, with seven CDFIs accredited and nearly £120 million of government funds already committed to community finance lenders. A second phase of the programme will open later this year, with the ambition of crowding in private capital and scaling support for the sector substantially over time, to grow the programme to at least £500 million.
Today’s reforms also include a new portfolio guarantee scheme delivered jointly by UK Export Finance and the British Business Bank, and designed to increase the availability of finance for small and medium-sized businesses.
Launching in spring next year, the scheme will help firms access lending to support export activity and expand into international markets, strengthening the UK’s exporting base and supporting long-term economic growth.
Alongside today’s announcements, the government is also pledging other key steps to support the wider SME finance ecosystem:
“The Growth Guarantee Scheme has played a vital role in funnelling more money into our regional economies and helping SMEs across the UK to invest and grow.
“For too long we have lagged behind other G7 economies on access to finance and this new funding will bring us a step closer to parity. Our research shows that almost half of businesses think easier access to finance will support their expansion.
“But it’s important that we do not stop here, it we want to help make the UK the best place to start and grow a business.”
Read more latest news from the Government here.
14.07.2026
