Government-backed business loans: what is open and how they work

A government-backed business loan is one where the state stands behind the lender or provides the money through a public fund; it is not a loan the state repays for you. The phrase covers two different arrangements:

• A guarantee to a commercial lender. The government promises to cover part of the lender’s loss if the borrower defaults. The lender makes the decision and sets the price. The Growth Guarantee Scheme works this way.
• A public fund that lends or invests. Public money is committed to a fund, and appointed fund managers lend it to businesses. The Investment Fund for Northern Ireland works this way.

People searching for government business loans often expect something closer to a grant. None of the options on this page is one. Each is debt, assessed on whether the business can afford it.

Three options covered by official sources are open as of October 2026: the Growth Guarantee Scheme, the Investment Fund for Northern Ireland and Start Up Loans. They serve different businesses.

The Investment Fund for Northern Ireland will deliver a commitment of around £100m of new funding. It is the fourth fund in Invest NI’s Access to Finance portfolio, which the British Business Bank put at £280m across four funds in December 2025. Our page on business loans in Northern Ireland covers the local picture in more detail.

The Growth Guarantee Scheme is the current government-backed guarantee scheme for business debt, open until 31 March 2030. An accredited lender provides the facility and receives a 70% guarantee on the outstanding balance after it has completed its normal recovery process. The lender decides whether to lend and whether to use the scheme, and sets the interest rate and fees.

Businesses with turnover of up to £45m can apply. A lender can ask for a personal guarantee but cannot take your main home as security. The detail on limits, eligibility, subsidy rules and costs is in our guide to the Growth Guarantee Scheme.

The three Covid-era loan schemes are closed to new applications: the Bounce Back Loan Scheme, the Coronavirus Business Interruption Loan Scheme (CBILS) and the Recovery Loan Scheme. Existing loans continue under their agreements.

Having one of these loans does not stop you applying under the current scheme, though it can affect how much you are eligible for. Our post on borrowing again with a Covid-era loan explains how each one counts.

Start with the age and location of the business and the amount you need, because those decide which options are open to you at all.

• Trading for less than five years and need up to £25,000: Start Up Loans are built for that stage.
• Established and need £25,001 or more as a loan: ask lenders about the Growth Guarantee Scheme. For asset finance, invoice finance and asset-based lending the scheme starts at £1,000.
• Based in Northern Ireland: the Investment Fund for Northern Ireland is an option alongside the scheme, where the limit is £1m per business group for borrowers in scope of the Northern Ireland Protocol.
• Looking for equity, not debt: the Investment Fund for Northern Ireland makes equity investments of up to £5m.

A government-backed option is not automatically the cheapest or the best fit. The British Business Bank says that if a lender can offer a commercial loan on better terms, it will do so. Compare what you are offered on total cost, term, security and flexibility, the same way you would compare any business lenders.

You apply to the lender or fund manager, never to the government directly. For the Growth Guarantee Scheme the route is:

1. Choose an accredited lender from the British Business Bank’s published list, or use a broker to find lenders that fit.
2. The lender runs its normal credit and affordability checks and decides whether to offer finance.
3. The lender decides whether to use the scheme for your facility. You cannot select it yourself.
4. You confirm in writing that the facility keeps you within the subsidy limit, then sign the agreement.

Capzy is a credit broker, not a lender, and gets paid by the lender. We take your details once and introduce you to lenders that may fit, subject to status and lender criteria. Scheme facilities are only available through British Business Bank accredited lenders, and the lender decides whether to use the scheme. You can check your funding options without affecting your credit score; a full application to a lender may involve a hard search.

The main risk is the same as with any borrowing: you owe the full amount whatever happens to the business. Government backing changes the lender’s risk, not yours.

• You remain 100% liable for the debt under the Growth Guarantee Scheme, and the lender follows its normal recovery process before it claims on the guarantee.
• A lender can still ask for a personal guarantee, at its discretion.
• Interest rates and fees are set by the lender and vary with the proposal.
• A business in difficulty is not eligible for the Growth Guarantee Scheme.
• Scheme borrowing counts as a subsidy, and earlier subsidised borrowing can reduce what you are eligible for.

If none of the schemes fits, standard commercial finance is the alternative. Lender-panel figures, not offers: term loans of £25k–£500k over 3–60 months, revenue finance repaid as a share of sales, asset finance, invoice finance and revolving credit. If the real problem is that repayments would not be affordable, a smaller facility or no new borrowing is the sounder choice.