UK Government Business Finance Schemes 2026

Why Government-Backed Finance Matters

Government-backed finance exists because commercial banks and lenders will often decline businesses that are too new, too small, or lack the assets to provide as security. The government addresses this by providing guarantees to lenders — if the business defaults, the government covers a portion of the loss. This allows lenders to say yes to businesses they would otherwise turn down.

In 2026, the British Business Bank manages the majority of these schemes. Since its creation in 2014, the BBB has supported over £15 billion in finance to hundreds of thousands of UK smaller businesses.

Scheme Amount Best For Status
Start Up Loans £500–£25,000 New businesses (under 5 yrs) Active
Growth Guarantee Scheme £25,001–£2m Established SMEs needing working capital or growth finance Active to 2030
Community ENABLE Funding £25,001–£250,000 Businesses declined by mainstream lenders Active
Innovate UK Innovation Loans £100k–£5m R&D and innovative businesses Active
UK Export Finance Up to £25m+ Businesses exporting goods or services Active
Enterprise Finance Guarantee — — Closed 2020

1. Start Up Loans

The Start Up Loans scheme is the most accessible government-backed finance for new UK businesses. Loans of £500 to £25,000 are available at a fixed 7.5% per annum (from April 2026), with no application fees and free 12-month mentoring. Multiple co-founders can each apply, giving a business access to up to £100,000 in total.

The scheme is delivered by the British Business Bank and has provided over 118,000 loans totalling £1.13 billion since 2012. Every application requires a business plan and 12-month cash flow forecast — free support to prepare these is provided by delivery partners.

Read our full Start Up Loans guide →

2. Growth Guarantee Scheme (GGS)

The Growth Guarantee Scheme launched on 1 July 2024, replacing the Recovery Loan Scheme. It is designed for established smaller businesses that need finance for working capital or growth but are struggling to access it on commercial terms.

The government provides a 70% guarantee to accredited lenders — this means the lender bears only 30% of the risk of default, enabling them to lend to businesses they would otherwise decline or charge a higher rate.

Key Terms

  • Maximum loan: £2 million (term loans and overdrafts); minimum £25,001 for term loans
  • Products: Term loans, overdrafts, asset finance, invoice finance, asset-based lending
  • Interest rate: Set by the individual lender — there is no fixed government rate. Rates vary based on your creditworthiness and the lender's pricing.
  • Government guarantee: 70% of the loan value
  • Scheme open until: 5 April 2030

Eligibility

  • UK-based smaller businesses with annual group turnover up to £45 million
  • More than 50% of income must come from trading activity
  • Must demonstrate that the finance is needed and the business is viable

How to Apply

You apply directly through an accredited lender — not through the British Business Bank directly. Accredited lenders include Barclays, HSBC UK, Funding Circle, iwoca, and others. The lender manages the application and guarantee process. Visit the British Business Bank website for the current list of accredited lenders. Before approaching a lender, open a business bank account if you don't already have one — lenders will expect to see your business banking history as part of their assessment.

3. Community ENABLE Funding

The Community ENABLE Funding Programme is a newer British Business Bank initiative that is largely unknown but highly valuable for businesses that have been declined by mainstream lenders. It channels government-backed funding through Community Development Finance Institutions (CDFIs) — not-for-profit lenders that specialise in underserved businesses.

Who It's For

The scheme particularly focuses on:

  • Businesses that have been declined by high-street banks
  • Ethnic minority-led businesses
  • Female-led businesses
  • Businesses in deprived or underserved communities
  • Social enterprises

Key Terms

  • Term loans and overdrafts: £25,001–£250,000
  • Asset and invoice finance: from £1,000
  • Interest rates: Set by individual CDFIs — typically higher than mainstream lenders, but accessible to those who cannot get mainstream finance
  • Total programme size: £82 million allocated as of May 2026

Accredited CDFI Lenders (May 2026)

  • Finance For Enterprise — Yorkshire, Humber, and nationally
  • BCRS Business Loans — West Midlands and Wales
  • ART Business Loans — Birmingham and the West Midlands

Visit the British Business Bank website for the full, current list of Community ENABLE Funding providers.

4. Innovate UK Innovation Loans

Innovate UK Innovation Loans are aimed at UK SMEs undertaking ambitious, late-stage research and development projects with strong commercial potential. They are not for standard businesses — the project must be genuinely innovative and pushing towards commercialisation.

Key Terms

  • Loan amounts: £100,000 to £5 million
  • Interest rate during project: 3.7% per annum (deferred — paid at the end)
  • Interest rate during repayment: 7.4% per annum
  • Coverage: Up to 100% of eligible project costs
  • Applications: Competitive rounds (Round 25 open early 2026)

Eligibility

  • UK-registered micro, small, or medium-sized enterprise (SME)
  • Project must be at Technology Readiness Level (TRL) 3–7
  • Project must have a clear route to market and strong commercial case
  • Recent focus areas: net zero, health and wellbeing, digital technologies

Note on Smart Grants

Innovate UK's Smart Grants programme — which previously provided non-repayable grants of up to £500,000 — was paused in January 2025 and no new rounds are currently open. Check the Innovate UK website (ukri.org/councils/innovate-uk) for any new announcements. If your innovation involves significant R&D expenditure, you should also explore R&D Tax Credits — the merged scheme (from April 2024) offers a 20% above-the-line credit and is often more immediately accessible than competitive grant rounds.

How to Apply

Apply via the Innovation Funding Service at apply-for-innovation-funding.service.gov.uk. Applications open in competitive rounds — check the Innovate UK website for current round dates.

5. UK Export Finance (UKEF)

UK Export Finance is the UK's export credit agency, helping UK businesses win overseas contracts and get paid. In 2026, UKEF announced an £11 billion automatic lending package available through the five major UK banks (Barclays, HSBC, Lloyds, NatWest, Santander) to support exporters.

Key Products for SMEs

  • General Export Facility (GEF): Government guarantee on working capital facilities up to ~£25 million — now with automatic approval for facilities up to £10 million through participating banks
  • Bond Support Scheme: Helps businesses provide contract bonds to overseas buyers without tying up their own working capital
  • Export Insurance: Protects against non-payment by overseas buyers (up to 95% of contract value)
  • Standard Buyer Loan Guarantee: Helps overseas buyers finance purchases from UK suppliers (£1m–£30m)

Who Can Use UKEF

Any UK business exporting goods or services, of any size. UKEF is actively targeting SMEs — they set a target to support 1,000 SMEs annually by 2029 (up from around 200 previously). UKEF has regional Export Finance Managers who provide free, impartial advice — worth contacting if you are starting to export.

How to Apply

Contact UKEF directly (ukexportfinance.gov.uk) or speak to your bank about UKEF-backed facilities. Your bank may be able to approve General Export Facility guarantees automatically under the new 2026 arrangements.

What Happened to the Enterprise Finance Guarantee?

The Enterprise Finance Guarantee (EFG) was a long-running scheme (2009–2020) that provided 75% government guarantees on loans of £1,000–£1.2 million for businesses lacking security. It supported over £3.3 billion in lending to 35,000+ businesses.

The EFG closed to new applications in 2020. It was initially replaced by the COVID-era CBIL and Bounce Back Loan schemes (both now closed), and subsequently by the Recovery Loan Scheme and then the Growth Guarantee Scheme. The Growth Guarantee Scheme is the current equivalent for established businesses needing larger amounts. For businesses that are too new for the GGS, the Start Up Loans scheme remains the best starting point. And once your business is generating revenue, crossing the VAT registration threshold of £90,000 is a common trigger to revisit your finance arrangements and consider growth funding.

Frequently Asked Questions

The Enterprise Finance Guarantee closed in 2020. The Growth Guarantee Scheme (launched July 2024, open until April 2030) is the current government-backed lending guarantee for established businesses. It provides a 70% government guarantee to accredited lenders on loans up to £2 million.

A British Business Bank scheme where the government provides a 70% guarantee to accredited lenders, enabling them to lend to businesses they might otherwise decline or charge higher rates. Available through banks including Barclays, HSBC, and Funding Circle for loans up to £2 million.

Yes — both the Start Up Loans scheme and Community ENABLE Funding (via CDFIs) are specifically designed for businesses unable to access mainstream bank finance. Community ENABLE Funding particularly focuses on ethnic minority-led and female-led businesses in underserved communities.

Innovate UK Smart Grants have been paused since January 2025. However, Innovate UK Innovation Loans (£100,000–£5 million at 3.7% during the project period) remain active for R&D-intensive businesses. Regional grants are available through Local Enterprise Partnerships and the Levelling Up Fund.

A lesser-known British Business Bank programme channelling £82 million through Community Development Finance Institutions (CDFIs). It provides loans of £25,001–£250,000 to businesses declined by mainstream lenders, with a focus on ethnic minority-led businesses, female-led businesses, and businesses in deprived communities.