The Chancellor's latest package of reforms is set to inject an additional £2 billion into the UK economy by 2028/29, as part of a major overhaul of small business funding. According to official estimates, this will support up to 12,000 extra businesses annually, helping to bridge the estimated £1.6 billion to £4.1 billion annual gap between SME demand for finance and availability.
At the heart of the government's strategy is a significant expansion of the British Business Bank's (BBB) Growth Guarantee Scheme (GGS). Since its inception in 2022, this scheme has facilitated over £3.7 billion in financing for UK SMEs, with a substantial proportion benefiting businesses outside London and the Southeast. The new proposals will see the GGS scale up to facilitate an additional £2 billion of SME lending per year by 2028/29, more than doubling its current annual support to £3.35 billion.
The reforms also include the broadening of eligibility criteria for the GGS, allowing businesses with an annual turnover of up to £54 million to access funding. This represents a significant increase from the previous limit of £45 million. Furthermore, the maximum term length for loans up to £1.1 million will be extended from six to ten years, providing SMEs with more flexibility to repay their debts.
Separately, the BBB is allocating an additional £500 million to support innovative SMEs and scaling firms through its ENABLE Guarantee programme. This targeted funding aims to help businesses rich in intellectual property (IP) secure finance and commercialise their ideas, addressing a long-standing challenge for these sectors.
The government's reforms have been welcomed by business leaders, who see them as a major step towards unlocking the UK's full economic potential. By providing SMEs with greater access to finance, policymakers hope to drive investment, productivity, and growth nationwide – ultimately boosting household finances and the overall economy.