How GGS interest rates are set
The British Business Bank does not set or cap interest rates under the Growth Guarantee Scheme. Each accredited lender prices its facilities independently based on its own cost of funds, risk appetite, and commercial objectives. This means rates vary considerably between lenders for the same borrower profile.
The 70% government guarantee benefits the lender by reducing their risk exposure. In theory, this should enable lenders to offer lower rates than they would on a purely commercial basis. In practice, the benefit is partially offset by the administrative cost of scheme compliance and the lender's credit risk on the remaining 30% exposure.
Typical interest rate ranges
Based on the lending market at the time of the scheme's operation, GGS interest rates for term loans typically ranged from around 7% to 15% per annum, depending on the borrower's risk profile, the loan size, the term, and the security available. The most creditworthy borrowers with strong asset backing could access rates at or below 8%. Higher-risk profiles or unsecured borrowing at the upper end of the loan limits could attract rates of 12% or higher.
These figures are indicative and reflect a period of elevated base rates. As the Bank of England base rate moves, variable-rate GGS loans will adjust accordingly. Fixed-rate products provide certainty over the repayment period at the cost of potentially higher initial pricing.
- Strong credit profile, asset security: approximately 7% to 9% per annum
- Average SME credit profile, limited security: approximately 9% to 12% per annum
- Higher risk profile, unsecured: approximately 12% to 15% per annum
- Rates are per annum, typically expressed on a reducing balance basis
- Variable rates linked to Bank of England base rate or SONIA
- Fixed rates lock your payment for the full term but may price slightly higher initially
Factors that influence your rate
Lenders price GGS facilities based on several factors. Your credit history and credit score are the starting point. A clean credit profile with no defaults, CCJs, or late payments will attract better pricing. Directors with adverse personal credit may face higher rates even if the business itself is creditworthy.
The loan-to-value ratio matters where security is available. If you can offer a charge over property or significant business assets, lenders will typically offer more competitive pricing because their 30% unguaranteed exposure is better protected.
Loan size also plays a role. Larger facilities are often more competitively priced on a percentage basis because the lender's fixed costs are spread across a bigger amount. A £1 million facility will often attract a lower rate than a £100,000 facility from the same lender.
- Credit history (business and personal directors' records)
- Available security (property, assets, or debenture over business assets)
- Loan size and loan-to-value ratio
- Loan term (shorter terms sometimes attract lower rates)
- Sector and perceived industry risk
- Strength of cash flow and debt service coverage ratio
- Lender's own liquidity and commercial targets at the time of application
Fixed vs variable rate GGS loans
Most GGS lenders offer both fixed and variable rate options. A fixed rate gives you certainty over your monthly repayment for the entire loan term, which simplifies cash flow planning and protects you if base rates rise. The trade-off is that you will not benefit if rates fall, and fixed-rate loans often carry early repayment charges.
Variable rate facilities, typically linked to the Bank of England base rate or SONIA (Sterling Overnight Index Average), adjust as rates change. They are often slightly cheaper than fixed rates at inception, but your monthly payment will fluctuate. Variable rates suit businesses with some tolerance for payment movement and the ability to absorb modest increases.
How to secure the most competitive rate
The most effective way to secure a competitive GGS rate is to use a broker who can approach multiple accredited lenders simultaneously. Different lenders have different risk appetites and pricing models, and the difference between the cheapest and most expensive lender for the same application can be 3 to 5 percentage points.
Presenting your application in the strongest possible light also matters. Clean, well-prepared financial information, a clear statement of purpose, and any available security all reduce the lender's perceived risk and tend to result in better pricing.
Frequently Asked Questions
Does the government control GGS interest rates?
No. Unlike the Bounce Back Loan Scheme, the Growth Guarantee Scheme does not set or subsidise interest rates. Each accredited lender prices its GGS facilities independently. The government's 70% guarantee benefits the lender, but there is no requirement for them to pass the benefit on in the form of a rate cap.
Are GGS rates higher than standard commercial loans?
Not necessarily. For borrowers who would struggle to access standard commercial loans at all due to limited security or a short trading history, the GGS guarantee enables access to lending that might otherwise be unavailable or very expensive. For strong borrowers with assets to pledge, the GGS rate may be similar to a standard commercial loan.
Can I negotiate the interest rate on a GGS loan?
Yes, within limits. Lenders have some flexibility on pricing, particularly for larger facilities or where the borrower has a strong credit profile. Using a broker who regularly places GGS business with a lender can result in more competitive pricing than approaching the same lender directly.
What is the difference between APR and the stated interest rate on a GGS loan?
The stated interest rate is the annual percentage applied to the outstanding balance. APR (Annual Percentage Rate) includes all fees and charges, making it a better measure of the true cost of borrowing. When comparing GGS facilities, compare APR or the total amount repayable rather than the headline rate, as arrangement fees can add significantly to the cost of a short-term facility.