Expansion of SME growth scheme
The Chancellor, Rachel Reeves, has announced an expansion of the British Business Bank’s (BBB) Growth Guarantee Scheme (GGS). This provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, cutting credit risk.
The changes will enable the scheme to scale up with an additional £2 billion of Small to Medium-sized Enterprises (SME) lending per year by 2028/29. This will bring the total lending supported through the scheme to £3.35 billion per year, more than double the current £1.35 billion.
It will also increase the maximum term length of a loan from six to 10 years for loans of up to £1.1 million and increase the maximum size of businesses eligible for a loan under the scheme from £45 million in annual turnover to £54 million.
The British Business Bank estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150% increase on the 8,000 currently being supported, bringing the total to 20,000. Since its launch in 2022, the scheme has delivered over £3.7 billion of financing to UK SMEs, with £2.5 billion of this reaching businesses outside of London and the Southeast.
It is claimed that every £1 spent on the scheme is estimated to support around £10 of lending by banks.
UK businesses are facing a “cost of business crisis”, according to the British Chambers of Commerce (BCC). Its new cost-stack calculator shows government policy alone has pushed up an average firm's expenses by 70% over the past decade, adding roughly £827,000 a year in costs for a typical mid-sized business. About a quarter of the rise stems from the increase in employer National Insurance contributions, with the higher minimum wage and mandatory pension auto-enrolment also major contributors.
Under Making Tax Digital (MTD) for Income Tax, sole traders and landlords with income of more than £50,000 have been required to keep digital records and send quarterly updates to HMRC since 6 April 2026.
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