Comparison · Business Finance · 2026
Growth Guarantee Scheme vs Start Up Loan UK 2026: Which Government Backing?
The UK runs more than one government-backed business finance scheme, and confusing them can mean applying to the wrong one. The Growth Guarantee Scheme and the Start Up Loan serve very different businesses at very different stages. This guide compares both for 2026.
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TL;DR - 30-Second Summary
- - Growth Guarantee Scheme: government guarantee to the lender, larger facilities, established/growing businesses, market rate
- - Start Up Loan: personal loan up to £25,000, fixed 6% rate, businesses under 36 months old
- - GGS does not reduce your liability as borrower — the guarantee protects the lender only
- - Businesses can use the Start Up Loan first, then GGS-backed finance as they grow
Side by Side
| Feature | Growth Guarantee Scheme | Start Up Loan |
|---|---|---|
| Who it protects | The lender (via government guarantee) | N/A — standard personal loan |
| Typical facility size | Larger, up to hundreds of thousands+ | Up to £25,000 |
| Interest rate | Lender's commercial rate | Fixed 6% p.a. |
| Business age | Established/growing businesses | Under 36 months trading |
| Extras | None | 12 months free mentoring |
Verdict
A genuinely new business under three years old with a modest funding need should look at the Start Up Loan first, for its fixed low rate and mentoring support. An established or growing business needing a larger facility — for equipment, working capital or expansion — should approach an accredited lender about Growth Guarantee Scheme-backed finance, understanding that the guarantee makes the lender more willing to say yes, but does not change your own repayment obligation. Compare terms across multiple accredited lenders, since GGS pricing is set commercially, not fixed by government.
Frequently Asked Questions
What is the Growth Guarantee Scheme (GGS)?
The Growth Guarantee Scheme is a government-backed scheme, delivered through accredited commercial lenders and facilitated by the British Business Bank, that guarantees a portion of a loan, overdraft, asset finance or invoice finance facility to the lender — encouraging lenders to provide finance to smaller businesses that might otherwise struggle to access it on standard commercial terms. It succeeded the Recovery Loan Scheme.
How is GGS different from the Start Up Loan?
The Start Up Loan is a personal, unsecured, fixed-rate (6%) loan of up to £25,000 aimed specifically at individuals starting or growing a business trading for less than 36 months. GGS is aimed at a much wider range of established and growing businesses (with turnover typically up to a much higher threshold), offers larger facility sizes, is lent by the bank at its own commercial rate (not a fixed government rate), and the government guarantee protects the lender, not the borrower.
Does the government guarantee under GGS reduce my liability as a borrower?
No — a common misunderstanding. The guarantee is between the government and the lender, encouraging the lender to approve the facility. As the borrower, you remain fully liable for repaying the debt under the normal terms of your agreement with the lender, exactly as with any other commercial loan, overdraft or asset finance facility.
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What size of business and loan does GGS support?
GGS is available to a wide range of smaller and medium-sized UK businesses by turnover, with facility sizes considerably larger than the Start Up Loan cap — running into the hundreds of thousands or low millions of pounds depending on the finance type (loans, asset finance, invoice finance or overdrafts), each with its own specific term limits set by the scheme rules.
Which scheme suits a very new business with no trading history?
The Start Up Loan remains the more accessible route for a genuinely new business, since it is specifically designed for companies trading under 36 months and does not require the trading history or financial track record that a GGS-accredited lender would typically want to see before approving a facility under commercial lending criteria, even with the government guarantee in place.
Can a business use both schemes at different stages?
Yes — many businesses start with a Start Up Loan to get going, then later apply for GGS-backed finance once they have a trading history and need a larger facility to fund growth, equipment, or working capital at scale. There is no rule preventing a business from using both schemes sequentially, as long as each individual application meets that scheme's specific eligibility criteria at the time.
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Disclaimer: This comparison is general educational information and not financial advice. Loan terms, guarantee coverage and eligibility are set by the British Business Bank and accredited lenders and may change. Refer to the British Business Bank for current scheme details.