Government loan schemes in 2025 help viable SMEs (Small and Medium-sized Enterprise) access lender finance through public guarantees and specialist programmes. This guide explains what they are and who they suit, compares schemes with bank loans, shows how to build a lender-ready pack and avoid application pitfalls, and sets out a simple monthend compliance routine.
If you need a broker to compare lender options, the team at Pinnacle Business Finance can help and for accountant-led guidance on choosing, applying and staying compliant, speak with Henry & Banwell Chartered Accountants in Bristol.
Government loan schemes 2025 at a glance
Government loan schemes channel finance through accredited lenders using public guarantees and targeted programmes. Lenders still underwrite credit and borrowers remain liable. Facilities include term loans, revolving credit, invoice and asset finance that complement standard bank products. Use a scheme when access or structure improves on a bank loan, and decide using cash flow timing, available security, and impact on profit and working capital.
Growth Guarantee Scheme (GGS)
What it is
The Growth Guarantee Scheme is a UK wide guarantee that supports accredited lenders offering term loans, overdrafts, asset finance, and invoice finance to viable SMEs. Lenders make the credit decision and the borrower remains responsible for repayment.
Who it’s for & eligibility
Trading SMEs with a viable plan that need improved access or structure compared with a standard bank offer. Typical eligibility includes UK trading status, SME size criteria, a viable credit assessment, subsidy control compliance, and the business not being in insolvency proceedings.
Costs and pricing
Rates and fees are set by accredited lenders. Expect an interest margin, possible arrangement fees, and non-utilisation fees on revolving lines. The guarantee does not set or cap the borrower rate, so price against risk and clarity of plan.
Security and guarantees
Security follows normal banking practice and may include a debenture or specific charges. Personal guarantees can be requested depending on risk. The guarantee is to the lender, and the borrower remains fully liable for repayment.
Key aspects
Available through accredited lenders, works alongside normal credit assessment, can support term debt and working capital, and should be matched to cash flow profile and covenant capacity.
Start Up Loans
What it is
A Start Up Loan is a government backed personal loan for new founders to cover early trading costs and working capital. It is separate from commercial business debt.
Who it’s for & eligibility
Pre revenue and early stage founders who need modest funding to start or formalise trading and build a repayment track record. Typical eligibility includes UK residency and age requirements, new or young businesses within the programme’s trading length rules, a viable plan and affordability, and personal credit checks.
Costs and pricing
Fixed rate personal lending for new founders. Amounts are affordability led. Arrangement and non-utilisation fees are not typical, and mentoring support is part of the package. Treat repayments as part of your personal budget as well as business planning.
Security and guarantees
Unsecured personal lending. No business debenture is taken. The applicant is personally liable, so review household affordability alongside the business plan and ensure repayments are realistic.
Key aspects
Fixed rate with mentoring and support, unsecured and personally repayable, and a useful stepping stone before approaching commercial lenders.
Innovation Loans
What it is
Debt funding from Innovate UK for later stage R&D and innovation projects that need time to reach commercial sales.
Who it’s for & eligibility
SMEs with clear technical milestones, a credible route to market, and realistic projections for cash generation in the repayment period. Typical eligibility includes being a UK registered SME, applying via an eligible Innovate UK competition, subsidy compliance, and evidence of ability to service the loan post project.
Costs and pricing
Interest is structured for a project period and a repayment period. Drawdowns align to milestones and some interest may be deferred until repayment begins. Model the step up in cost and the start of repayments in your cash flow.
Security and guarantees
Security and covenants are tailored to the company and project. Charges over assets or intellectual property may be requested. Review undertakings and reporting carefully to ensure the facility remains affordable through testing and commercialisation.
Key aspects
Staged drawdown aligned to project phases, a lower interest period during the project, a higher rate in repayment, and suitability for IP rich plans where standard term debt would be premature.
Recovery Loan Scheme (RLS)
What it is
The Recovery Loan Scheme previous guarantee scheme that preceded GGS. It is not available for new lending.
Who it’s for & eligibility
Existing borrowers with RLS facilities agreed earlier who continue under their original terms. Eligibility reflects the scheme and lender criteria applied at the time of approval; no new applications are taken.
Costs and pricing
Legacy facilities follow their original agreements. Check your documents for margins, fees, and any utilisation conditions. New guaranteed lending now routes through GGS, so no new RLS pricing applies.
Security and guarantees
Security and any personal guarantees continue as documented at approval. Maintain covenant and reporting obligations, and speak to the lender early if you need to change the repayment profile.
