British Business Bank loans: availability and alternatives

The British Business Bank is a government-owned body that was created to provide finance for smaller UK businesses and encourage British enterprise. However, the bank doesn’t lend money directly to most businesses. Instead, it works through 50+ accredited lenders, including high street banks and alternative lenders like Funding Circle, who deliver its schemes.

When you’re searching for external funding, the British Business Bank can be a great starting point, offering the benefits of a wide cross-section of lenders and finance products. 

Let’s look at what the British Business Bank offers, and where you might want to consider other lenders and potential routes to funding for your business. 

What the British Business Bank does

The British Business Bank’s philosophy is about ‘Powering UK ambition and growth’ by giving UK-based businesses access to the funding they need to expand and grow.

The bank has helped finance flows worth £6.8bn to reach smaller UK businesses in 2024/25, according to the most recent Impact Report, with this lending helping to support growth, innovation and economic stability for UK Plc. 

How does borrowing from the British Business Bank work?

The bank backs lending through guarantee schemes, currently the Growth Guarantee Scheme (GGS). The GGS provides a partial government guarantee to accredited lenders on loans, asset finance, invoice finance and overdrafts, giving you a number of ways to access debt finance.

The bank also supports new enterprises through Start Up Loans for newer businesses and entrepreneurial individuals who are starting out with a new business idea. These start-up loans are delivered through the network of partner organisations working with the bank.

What else does the bank offer? 

British Business Bank research gives an overview of the current lending, economic and business environments in the UK. And the bank’s Finance Finder tool is a useful place for business owners to find and compare finance options across the UK market. 

The bank also manages equity programmes, like British Business Investments and British Patient Capital. These platforms are designed to support UK-based venture and growth capital, a non-loan-based strand of equity-based financial support for growing businesses.

What the British Business Bank doesn’t do

Although the British Business Bank and its partners offer a wide range of financial and funding support for UK-based businesses, there are some areas it can’t support.

Here are a few key services the bank does not offer:

• Direct funding: The bank does not lend directly to most small businesses. Unlike the Big Four UK banks, you can’t open an account with or apply to the bank as a retail customer. Instead, lending is provided through the bank’s network of partners. 

• Interest rates and terms: The bank does not set the interest rate or terms on an individual loan. These terms and rates will be set by the accredited lender. The British Business Bank’s role is to guarantee the finance behind the loan, not to provide the commercial terms.

• The Recovery Loan Scheme: The Recovery Loan Scheme (RLS) was a previous guarantee scheme that provided post-pandemic support for affected businesses. The RLS is now closed and was extended and replaced by the Growth Guarantee Scheme from 8 July 2024. Your business can no longer apply for the RLS. 

How to get a British Business Bank-backed loan

You know your UK-based business needs external funding. So, what steps can you take to apply for funding through the British Business Bank and its accredited partners?

• Step 1 – Decide on a lender: Choose one of the bank’s accredited lenders. There are currently more than 50 accredited lenders to choose from, including major banks, alternative lenders and specialist finance providers, like Funding Circle.

• Step 2 – Apply for finance:  Apply for your chosen finance directly through the partner lender, not through the bank. This may be a business loan, or a government-backed loan like the Growth Guarantee Scheme. 

• Step 3 – Review the application: The lender will review your application based on the information you provide, your company’s financial data and your business credit score.

• Step 4 – Guarantee the loan: The British Business Bank guarantees the loan. The bank guarantee provides the lender with a 70% government-backed guarantee on the outstanding balance if your business defaults. This reduces their financial risk and helps them approve funding you might not otherwise qualify for. NOTE: your business remains fully liable for 100% of the debt.

• Step 5 – Receive your funds: If your application is successful, the lender will provide the funds, and you can use this finance to fund your growth strategy. You’ll repay the loan under the rate and terms agreed with the accredited lender. The bank does not set these rates or terms. 

Not every accredited lender offers the full range of finance products, or covers every region of the UK. It’s good practice to check which lenders and finance options are available to your business before you apply with your chosen lender. 

Note, eligibility and application processes will vary by lender. The Schemes guarantee is to the lender and not your business. Your business will remain 100% liable for this debt. 

You can check the current options with the British Business Bank’s Finance Finder.

Alternatives to British Business Bank loans

You might find that the exact combination of funding you need isn’t available through the British Business Bank network. However, some accredited lenders, like Funding Circle, do offer a broader palette of options. 

At Funding Circle, we believe in fast, straightforward finance deals, so you get the capital injections needed to bring your growth plans to life. Our products are designed to fit the needs of a wide range of business owners and come with decisions in as little as five minutes.

Funding Circle offers:

1. Unsecured loans: Funding Circle Unsecured Loans help you borrow from £10,000 to £750,000, without the need to offer security. No guarantee scheme is needed, making this a straightforward route to finance outside of the GGS. 

2. Asset finance: The Funding Circle Marketplace is a multi-lender panel of finance partners, offering a broad range of deals to purchase or lease equipment, vehicles or agricultural equipment. Finance is secured against the asset. 

3. FlexiPay:Funding Circle Flexipay is a flexible credit line for shorter-term or working capital needs. Rather than using expensive overdraft facilities, Flexipay helps you cover your key operational expenses and ad-hoc costs. 

4. Business credit card: The Funding Circle Cashback card is a business credit card to cover smaller, ongoing spend rather than a lump sum. You also get 2% cashback on all transactions for the first six months (up to £2000), helping to stretch out your cash flow. 

Other finance products to consider

There’s a wide range of finance products that may be right for your business needs. Aside from traditional debt finance and lines of credit, there are plenty of other options to think about. 

Other finance options include:

1. Invoice finance: Going the invoice financing route unlocks cash that’s currently tied up in unpaid customer invoices. A lender advances a percentage of the owed amount, helping you maintain healthy cash flow without waiting for standard payment terms.

2. Bringing in external investors: If you can find suitable private investors or private equity investment, this provides equity capital in exchange for a share of your business. It sidesteps loans, interest and personal guarantees entirely, though you trade away some ownership and future profits.

3. Supplier/trade credit:Trade credit agreements with your supplier can be a short-term cash flow alternative. Suppliers agree to let you buy inventory or materials now and pay later – usually within 30 to 90 days – without taking out a formal loan.

4. Government grants: Grants have the advantage of supplying funding that, generally, doesn’t need to be repaid. However, competition for the available national and local grants can be tough. Eligibility is often tightly restricted to specific sectors, regions or projects like innovation and sustainability.

How Funding Circle can help fund your business plans

Funding Circle is one of the British Business Bank’s accredited lenders for the Growth Guarantee Scheme. 

If you meet the Growth Guarantee Scheme (GGS) eligibility criteria, there’s no need to search through the full directory of 50+ lenders. You can apply right away for a GGS-backed loan directly through Funding Circle. 

With a Funding Circle GGS-baked loan, you can:

• Borrow from £25,001 to £250,000

• Repay the loan over terms of 24 to 72 months,

• Enjoy rates from 13.4% per year

Outside of the GGS, a Funding Circle Unsecured Loan is an alternative option, giving you the chance to borrow from £10,000 to £750,000 with no security against the loan. 

Who’s eligible to borrow from Funding Circle?

To be eligible for Funding Circle lending, you must:

• Be a UK-based limited company or LLP

• Have at least 12 months of trading history

• Meet our turnover requirements (assessed on a case-by-case basis)

As with any finance decision, it’s good practice to consult with your business, accounting and legal advisers before applying for any additional funding. 

Start your next growth chapter with a loan from Funding Circle

With government-backed Growth Guarantee Scheme loans available directly through Funding Circle, there’s no obstacle to funding the next step in your growth strategy. 

Apply for a loan in minutes, borrow from £25,001 to £250,000 and inject the capital needed to get your business plan off the ground.

Apply for a Growth Guarantee Scheme Loan

British Business Bank loans FAQs

Does the British Business Bank lend money directly?

No. The British Business Bank does not lend directly to business customers. Instead, it partners with a network of accredited finance lenders who supply the loans and lines of credit. 

What is the Growth Guarantee Scheme?

The Growth Guarantee Scheme provides small businesses with access to government-backed loans, asset finance and invoice facilities through a network of accredited lenders. The finance is used to help these businesses invest and grow. The Schemes guarantee is to the lender and not your business. Your business will remain 100% liable for this debt. 

What happened to the Recovery Loan Scheme?

The post-Covid Recovery Loan Scheme ended in July 2024 and was rebranded and extended as the Growth Guarantee Scheme (see above). 

Is there a British Business Bank ‘growth fund’?

No, there’s no single growth fund offered by the British Business Bank. But the bank does partner with a network of accredited lenders and partners to offer the Growth Guarantee Scheme, regional development funds and equity based investment support. 

Can I get a British Business Bank-backed loan through Funding Circle?

Yes, you can apply directly to Funding Circle to get a Growth Guarantee Scheme loan. 

Disclaimer

11/10/26 – While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.