A Guide to the Green Growth Guarantee Scheme

There’s no denying that sustainability is not just a buzzword but a strategic imperative. UK small and medium-sized enterprises (SMEs) are increasingly seeking ways to align profitability with environmental responsibility.

Recognising this shift, the UK government has introduced the Green Growth Guarantee Scheme (Green GGS), a pilot initiative designed to facilitate access to finance for businesses investing in sustainable assets.

This Industry Insights blog aims to demystify the Green GGS, highlighting its benefits, eligibility criteria, and practical applications for SMEs.

What is the Growth Guarantee Scheme?

To appreciate the Green GGS, it's essential first to understand its foundation—the Growth Guarantee Scheme (GGS).

Launched in July 2024, the GGS is a government-backed initiative aimed at supporting UK SMEs in accessing finance to invest and grow. Announced in the Spring 2024 Budget, the GGS is an extension of the Recovery Loan Scheme (RLS), ensuring continued financial support for businesses across the UK. The scheme offers:

• Loan Facilities: Up to £2 million per business group for borrowers outside the scope of the Northern Ireland Protocol, and up to £1 million for those within it.
• Government Guarantee: A 70% government-backed guarantee to lenders, encouraging them to provide finance to businesses that might otherwise struggle to secure it.
• Flexible Terms: Support for various financial products, including term loans, overdrafts, asset finance, invoice finance, and asset-based lending, with terms ranging from three months up to six years.

The GGS is designed to improve the terms on offer to borrowers. If a lender can offer a commercial facility on better terms, they will do so.

What is the Green Growth Guarantee Scheme?

Building upon the GGS, the Green Growth Guarantee Scheme (Green GGS) is a pilot initiative specifically targeting businesses investing in green technologies.

Its primary objective is to address the challenges lenders face when financing green assets, such as uncertainties over future asset values and limited secondary market data. By providing a government-backed guarantee, the scheme mitigates lender risk, thereby encouraging increased lending for sustainable investments.

What are the differences between GGS vs. Green GGS?

While both schemes aim to facilitate access to finance for SMEs, key distinctions include:

• Focus on Sustainability: GGS supports a broad range of business investments, whereas Green GGS specifically targets investments in green assets that contribute to a low-carbon economy.
• Risk Mitigation: Green GGS addresses specific lender concerns related to the valuation and resale of green assets, which can be more challenging due to rapidly evolving technologies and markets.
• Eligibility Criteria: While general eligibility criteria are similar, Green GGS may have additional requirements related to the nature of the green investment.

Can I apply for the Green Growth Guarantee Scheme?

The Green GGS is designed for UK-based SMEs seeking to invest in sustainable assets. Eligible businesses typically:

• Have an annual turnover of up to £45 million.
• Operate within the UK, generating more than 50% of income from trading activity.
• Demonstrate a viable business proposition and are not in financial difficulty.

Specific eligibility may vary among accredited lenders, with some requiring a minimum trading history or investment size.

Benefits of the Green Growth Guarantee Scheme

The Green GGS offers several advantages for SMEs:

• Enhanced Access to Finance: By mitigating lender risk, the scheme enables businesses to secure funding that might otherwise be inaccessible or available only on less favourable terms.
• Support for Sustainable Investments: Facilitates the acquisition of green assets, aiding businesses in reducing their environmental footprint and aligning with sustainability goals.
• Competitive Advantage: Investing in green technologies can lead to operational efficiencies, cost savings, and improved brand reputation.
• Contribution to Net-Zero Goals: Supports the UK's broader objectives of achieving net-zero carbon emissions by promoting environmentally friendly business practices.

What can the Green Growth Guarantee Scheme fund?

Funds obtained through the Green GGS can be utilised for various sustainable investments, including:

• Installation of renewable energy systems (e.g., solar panels, wind turbines).
• Upgrading to energy-efficient machinery or equipment.
• Implementing waste reduction or recycling initiatives.
• Enhancing building insulation or other energy-saving measures.
• Adopting low-emission vehicles or transportation solutions.

We can consult with accredited lenders to confirm the eligibility of specific projects under the scheme.

How to apply for the Green Growth Guarantee Scheme?

Applying for the Green GGS involves several steps:

1. Check Your Eligibility: Submit a quick enquiry to check your eligibility in less than 60 seconds, we do not report this to credit agencies, so it will not impact your credit score.
2. Prepare Documentation: Gather necessary documents, such as business plans, financial statements, and details of the proposed green investment.
3. Submit Application: We approach a suitable lender to discuss your financing needs and apply.
4. Lender Assessment: The lender will evaluate your application based on standard credit, fraud, Anti-Money Laundering (AML), and Know Your Customer (KYC) checks.
5. Approval and Funding: If approved, the lender will provide the financing under the Green GGS terms.

Note that all facilities, including those backed by the Green GGS, are provided at the discretion of the lender.

Speak to a Business Finance Specialist today

The Green Growth Guarantee Scheme represents a significant opportunity for UK SMEs to invest in sustainable technologies and practices. By addressing financing challenges associated with green investments, the scheme empowers businesses to contribute to environmental goals while enhancing their competitiveness and resilience. 

If you require further information or assistance in navigating the Green Growth Guarantee Scheme, feel free to reach out to our team at Millbrook Business Finance. We're here to support your journey toward sustainable growth. Interested in learning more about our other business finance solutions? Check out our Complete Guide to Business Finance.

Interested to see how much you could borrow? Check your eligibility now to understand your borrowing power.