Government-backed business loans in the UK

The government does not lend to businesses itself: it backs loans made by others. If you have traded for under 60 months, that means a Start Up Loan of £500 to £25,000 at a fixed 7.5% a year; if you are established, it means the Growth Guarantee Scheme, where a bank or other accredited lender takes a 70% government guarantee on a loan of up to £2m.

Our view: chase a government-backed loan for the price, not for a safety net. The guarantee protects the lender. Under every scheme on this page you repay every penny, and on a Start Up Loan you owe it personally.

Figures checked 1 November 2026 from the British Business Bank and Start Up Loans.

The government business loan schemes open now

Bounce Back Loans and the Recovery Loan Scheme are closed. Grants are not loans and sit outside this table; see our UK business grants guide.

How the Growth Guarantee Scheme works for established firms

The Growth Guarantee Scheme opened on 1 July 2024 as the successor to the Recovery Loan Scheme. It covers term loans, overdrafts, asset finance, invoice finance and asset-based lending. The lender, not the government, decides whether to lend, sets the rate and runs its usual credit checks, and lenders are told to use the scheme only when they cannot offer the same terms without it.

To qualify, according to the British Business Bank, your business must:

• trade in the UK, with the core of its operations here;
• earn more than half its turnover from trading;
• have turnover of no more than £45m a year (group basis);
• have a borrowing proposal the lender considers viable, and not be in insolvency proceedings.

Start-ups can apply at the lender's discretion, and sole traders and partners are eligible. Lenders may take a personal guarantee if that is their normal practice, but cannot take your main home as security. Upfront fees, broker fees included, are capped at 5%.

What the 70% guarantee does and does not do

The British Business Bank's own worked example shows who carries the loss when a guaranteed loan goes wrong. A business borrows £1,000,000 and gives a £100,000 personal guarantee. It repays £400,000 and then defaults, owing £1,000,000 − £400,000 = £600,000. The lender recovers £100,000 from business assets, leaving £500,000, then calls the £100,000 guarantee, leaving a loss of £400,000. Only then does the scheme pay: 70% × £400,000 = £280,000, so the lender's final loss is £120,000.

Read that from the borrower's side: the director paid the full £100,000 guarantee before the government contributed anything. The guarantee makes a bank more willing to lend; it does not shrink what you owe.

Changes announced in July 2026

On 12 July 2026 the Chancellor announced £6.5bn of extra lending capacity (an estimated 33,000 businesses), terms of up to 10 years on term loans and asset finance, and a turnover limit rising from £45m to £54m. Announced, not yet live: the British Business Bank says the scheme runs on its existing terms while lenders put the changes in place. Ask the lender which terms apply on the day you apply.

Banks that lend under the scheme

The accredited list has 56 lenders, including Barclays, HSBC, Lloyds Bank, NatWest, Santander, Royal Bank of Scotland, Bank of Scotland and Virgin Money, alongside challenger banks, asset finance houses and community lenders. Not every lender offers every product, so check the accredited lender list filtered by your region. Our bank business loans comparison has each bank's own published rates for smaller unsecured loans.

Start Up Loans, the government startup loan

A Start Up Loan is a government-backed, unsecured personal loan for business purposes. You can borrow £500 to £25,000 at a fixed 7.5% a year over 1 to 5 years, with 12 months of free mentoring. Each owner or partner can apply separately, up to £100,000 per business. No application, set-up or early repayment fees.

You need to be:

• aged 18 or over
• a current UK resident with the right to work in the UK
• starting a business or trading for up to 60 months
• unable to get finance elsewhere (a self-declaration is accepted)
• passing a personal credit check and affordability assessment

The application asks for a business plan, cash flow forecast and personal survival budget, and the loan cannot be used to repay existing debt.

Our full Start Up Loans guide covers the application step by step.

Regional government business loan funds

The British Business Bank's Nations and Regions Investment Funds put money into smaller businesses through appointed local fund managers. Loans start at £25,000, so they sit above Start Up Loans and alongside the Growth Guarantee Scheme. The British Business Bank lists no fund for London.

Source: British Business Bank fund pages, checked 1 November 2026. Rates and terms are set by each fund manager and are not published on these pages.

Which government-backed loan fits your business

• Trading under 60 months and need up to £25,000: apply for a Start Up Loan first. A fixed 7.5% with no fees is hard to beat at this size, and the mentoring is free.
• Established and need more than £25,000: ask your own bank whether it can lend under the Growth Guarantee Scheme, then a second accredited lender. The scheme term loan starts at £25,001, just above the £25,000 ceiling on Barclays' and HSBC's small business loans.
• Established and need less than that: the scheme only reaches below £25,001 through asset or invoice finance (from £1,000). For a plain cash loan, compare the banks' own small loans.
• Need the money this week, or the bank said no: none of these schemes is quick. If you take card payments, an advance repaid from your card takings is faster but costs more; read how a merchant cash advance works and the rate comparison before you sign.

Sole trader? Our sole trader loans guide sets out which lenders say they accept you. Still repaying a Bounce Back Loan? See your Bounce Back Loan repayment options.

Taking card payments? A free statement review checks whether you are overpaying on card fees, which is money back in the business before you borrow anything.

Frequently asked questions