UK unveils major small-business finance overhaul to boost lending

Rachel Reeves unveiled a major expansion of Britain’s small-business finance system on July 13, placing the British Business Bank’s Growth Guarantee Scheme at the center of a package designed to push more bank lending toward smaller firms. The move is designed to help unlock credit for companies that can show viable plans but still struggle to secure affordable finance.

The Growth Guarantee Scheme, which launched with accredited lenders on 1 July 2024, provides a 70% government-backed guarantee on commercial loans and can generally support facilities of up to £2 million. Under the new package, the scheme will be scaled up to support an additional £2 billion of SME lending a year by 2028/29, lifting total lending supported through the programme to £3.35 billion annually. That would allow an extra 12,000 businesses a year to be backed by 2028/29, taking the total to around 20,000.

The British Business Bank puts the expansion at a £6.5 billion uplift and estimates it could help around 33,000 businesses across the UK’s nations and regions. Around 70% of the facilities already supported through the programme have gone to firms outside London and the South East. The scheme covers term loans, overdrafts, asset finance, invoice finance and asset-based lending.

HM Treasury puts the SME finance gap at between £1.6 billion and £4.1 billion a year, a shortfall that leaves firms with plans to hire workers, buy equipment or expand into new markets unable to obtain the credit they need. The package also included £500 million in government funding for innovative SMEs and scale-ups, plus additional support for community lenders, finance for innovation and exporters.

In July 2025, the government outlined a £4 billion finance boost and tougher late-payment reforms. The British Chambers of Commerce found that three quarters of firms have been paid late at some point and 28% say it affected operations.