5 Things You Need To Know About Government Small Business Loans UK

Lets look at 5 Things You Need To Know About Government Small Business Loans for UK companies.

If you’re starting or growing your own business, how to finance things will definitely have crossed your mind. Lets look at what government backed small business loans are available.

Government Small Business Loans

With private funding and government backed business finance schemes available, the subject is a bit of a minefield. It’s a subject complicated even further by the ongoing Coronavirus pandemic.

In this blog, we’re going to help you better understand the government backed business finance options currently available. We’ll cover off the following key subjects:

  • The Difference Between A Government Grant And A Government Business Loan In The UK
  • How UK Government Business Loans Work
  • The Recovery Loan Scheme
  • How Much Money Your Business Can Borrow Through UK Government Business Finance
  • What You Need To Do To Get A Government Backed Business Loan

Ready to grow your business? Let’s jump in and answer your questions about the current small business government loan schemes…

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Is There A Difference Between A Government Grant And A Government Business Loan?

When it comes to government grants and government loans, there’s typically one fundamental difference; grants don’t need to be paid back, whereas loans do (and with interest to boot). So, it’s a simple decision then? Just go and get a grant? Well, not exactly.

You see with grants, the criteria for getting one is much more stringent than with loans. Government grants normally need to financially assist more than just your own business. For example, if you can demonstrate that the grant will be used to help stimulate the economy or provide local jobs in developing areas, you might be successful.

It’s worth noting though, in some cases, you’ll also need to match the amount of money you’re asking for to win a government grant.

Get In touch to discuss your Business Loan options

How Does A Government Business Loan Work?

Government backed loans operate in a much more conventional way. They’re very similar in how they work to high street loans. You borrow an amount and pay that amount back with interest, usually over a set period.

COVID-19 has made it much tougher for start-ups and growing businesses to obtain open market borrowing, so government lending is proving more critical than ever.

Small business loans issued by the Government can be used for lots of different purposes too, meaning they’re a flexible solution to most funding requirements. There are also different types of government loan available, depending on how long you’ve been trading and what you plan to use the money for.

Often Government backed loans are an excellent solution to your business finance needs, as some won’t require security and the rates are often better than those offered by commercial lenders.

The government scheme is run by the British Business Bank.

What Is The Recovery Loan Scheme?

In addition to some of the better known government lending schemes such as start-up loans (which are unsecured loans for businesses that have been trading for up to 24 months), the Coronavirus has seen the Government offer additional support and options.

The most recent of which is the Recovery Loan Scheme which launched on 6th April 2021.

In essence the Recovery Loan Scheme replaces other COVID specific government offerings, such as the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme, which both ended at the end of March 2021.

The Recovery Loan Scheme provides loans of between £25,000 and £10 million to qualifying businesses. If you need support with things like managing cashflow, equipment investment and growth plans, the Recovery Loan Scheme could be a viable solution.

With the loans being 80% guaranteed by the Government, lenders will have much more confidence in offering these loans to businesses with a solid and demonstrable trading history. Although the business lending the money still remains 100% liable.

Related Article: Recovery Loan Scheme: RLS vs CBILS vs BBLS

Call 0161 5469128 to Discuss The Recovery Loan Scheme.

Is There A Borrowing Limit For Small Business Loans By The Government?

This entirely depends on the type of loan your business needs and the stage your business is at within its development. For example, the Recovery Loan Scheme can offer businesses up to £10m, whereas a government backed start-up loan can only provide up to £25,000.

As you can imagine, the criteria for obtaining a secured multi-million pound loan is very different in comparison to an unsecured loan running into the thousands. We’d be happy to talk you through the different options and tailor a finance solution specific to your business goals.

Loans up to £250,000 from the Recovery Loan Scheme, do not require a personal Guarantee.

How To Get A Government Loan For Small Business UK?

Armed with all this information, if you’re ready to apply get in touch today. We have an excellent track record of supporting businesses of all shapes and sizes across multiple sectors with our bespoke financial solutions.

Following an exploratory chat, we’ll be in a position to advise the different types of business finance available to you and take you through the application process, step-by-step. With our guidance, we can help you secure the best possible rates and most effective funding options, based on your exact circumstances.

Find Out More About Government Backed Business Loans

Speak to one of our commercial finance brokers on 0161 5469128

Alternatively fill in the enquiry form below to start your application instantly.