Growth Guarantee Scheme vs Recovery Loan Scheme: What Changed?

By Andy Pickett · Chief Technology Director and AI Champion

Published 12 June 2026 · About the author

Comparing the Growth Guarantee Scheme vs Recovery Loan Scheme matters if you borrowed under RLS, were declined under it, or are weighing up government-backed funding today. The two schemes look similar on paper, and that is deliberate. This guide explains what carried over, what changed and what it means for your existing or future borrowing under Growth Guarantee Scheme funding.

What was the Recovery Loan Scheme?

The Recovery Loan Scheme (RLS) was a government-backed lending programme launched in April 2021. It helped UK businesses access finance as the economy emerged from the pandemic. Like its successor, it was administered by the British Business Bank and delivered through accredited commercial lenders.

RLS ran in three phases. The early phases offered larger facilities and an 80% government guarantee, and initially required businesses to confirm they had been affected by Covid-19. The third and final phase, from August 2022, dropped the Covid-impact requirement, reduced the guarantee to 70% and capped facilities at £2 million. That final phase is the version GGS most closely resembles.

What is the Growth Guarantee Scheme?

The Growth Guarantee Scheme (GGS) is the successor programme that launched on 1 July 2024. It gives accredited lenders a 70% government guarantee on each facility, encouraging them to lend to viable smaller businesses. Facilities run from £1,000 to £2 million across term loans, overdrafts, invoice finance and asset finance.

The borrower remains 100% liable for the debt — the guarantee protects the lender, not you. An extension of the scheme to 2030 has been announced, which signals that government-guaranteed lending is now a permanent fixture rather than a crisis response. Full commercial details are on our Government Growth Scheme page.

GGS vs RLS: side-by-side comparison

This table compares the Growth Guarantee Scheme with the final phase of the Recovery Loan Scheme, which ran from August 2022 until 30 June 2024.

What carried over from RLS

Continuity was the point. The British Business Bank designed GGS so lenders and borrowers could move across without relearning the rules. The elements that carried over directly include:

• The 70% government guarantee to the lender.
• The £2 million maximum facility and £45 million turnover cap.
• The four product types: term loans, overdrafts, invoice finance and asset finance.
• Maximum terms of six years for loans and asset finance, and three years for overdrafts and invoice finance.
• Delivery through accredited commercial lenders, with pricing set by each lender.
• The rule that a borrower’s principal private residence cannot be taken as security.

One more constant is worth naming: pricing. Under both schemes, the government never set interest rates. Each accredited lender prices its own facilities commercially, factoring in the guarantee fee it pays to access the scheme. Two lenders could quote the same business very different rates under RLS, and they still can under GGS.

Most RLS-accredited lenders moved across to GGS, so the lending market looked familiar from day one. Our guide to Growth Guarantee Scheme lenders explains how that accreditation process works.

What changed between the schemes

The changes are more about framing and longevity than mechanics, but they matter.

From recovery to growth

RLS existed to stop viable businesses failing for lack of finance after the pandemic. GGS exists to help smaller businesses invest and grow. That shift changes how lenders position the scheme: expect conversations about expansion, equipment and working capital for growth, not survival funding.

A longer horizon

RLS was always a temporary measure with cliff-edge deadlines. GGS launched with a longer runway, and an extension to 2030 has since been announced. Businesses can now plan around the scheme rather than racing application deadlines.

Subsidy treatment

Both schemes operate under UK subsidy control rules, and borrowers must declare previous subsidies when applying. If you received Covid-era support, declare it accurately — the lender will guide you through what counts. Our comparison of business grants vs government loans covers how subsidised support stacks up.

A refreshed lender panel

Accreditation reset with the new scheme. Most major RLS lenders reaccredited, and new specialist lenders have joined since launch. The practical effect is more choice across asset finance, invoice finance and alternative lending than under late-stage RLS.

What the change means for your situation

The practical impact of the transition depends on where you stand. Three common positions cover most readers.

You hold an RLS facility and need nothing new

Do nothing. Your agreement runs to term exactly as signed. Diarise a rate review for when your trading position improves, in case a cheaper refinance becomes available later.

You hold RLS debt and need more funding

You can apply for a GGS facility on top, provided combined repayments pass affordability. Lenders will look at your conduct on the existing facility — a clean payment record on RLS borrowing is genuinely useful evidence in a new application.

You never used RLS and are new to guaranteed lending

You start with a clean sheet, and the growth framing works in your favour. Applications built around investment — equipment, premises, hiring, new contracts — fit the scheme’s purpose squarely. Check the basics in our eligibility guide, then approach the market with a clear plan.

Why the scheme evolved

Government guarantee schemes are not new — the Enterprise Finance Guarantee ran from 2009 before the pandemic-era schemes. Each generation refines the model: guarantee levels, caps and eligibility adjust to economic conditions.

The full lineage helps explain where GGS sits:

• 2009 — Enterprise Finance Guarantee (EFG). The post-financial-crisis original: a 75% guarantee helping viable SMEs without enough security.
• 2020 — CBILS and Bounce Back Loans. Emergency pandemic schemes with 80–100% guarantees, interest-free periods and minimal checks. Crisis tools, not a sustainable model.
• 2021 — Recovery Loan Scheme. The bridge back to commercial lending: guarantees stepped down from 80% to 70%, normal underwriting returned.
• 2024 — Growth Guarantee Scheme. The settled, steady-state version: 70% guarantee, full commercial credit checks, growth framing and an announced extension to 2030.

The evolution from RLS to GGS reflects a policy conclusion that smaller businesses face a persistent finance gap, not just a pandemic-shaped one. Backing lenders with a guarantee costs the government far less than direct lending, while unlocking commercial credit for businesses that would otherwise be declined. The announced extension to 2030 confirms the model has become standing infrastructure.

What happens to existing RLS facilities?

Nothing changes. If you borrowed under RLS, your facility continues on the terms you signed. The interest rate, repayment schedule and security arrangements all stand until the facility is repaid. The closure of RLS to new applications has no effect on live agreements.

You keep repaying your existing lender as normal. The government guarantee on your facility also remains in place for the lender’s benefit throughout its life.

Can you refinance an RLS facility into GGS?

Possibly. Refinancing is a legitimate business purpose, and some accredited lenders will consider refinancing existing debt — including RLS borrowing — into a new GGS facility. Whether it makes sense depends on the rates available, remaining term, early repayment charges and your current trading position.

You can also hold an RLS facility and a new GGS facility at the same time, subject to affordability and the lender’s assessment of your total scheme borrowing. Run the numbers carefully with our business loan calculator before committing, and compare the true total cost rather than the headline rate.

A worked refinance example

A wholesaler borrowed £250,000 under RLS in early 2023 at 11.5% over six years. Three years in, the balance is about £140,000 with three years left, costing roughly £4,615 a month.

Trading has strengthened, and a GGS lender now offers 9% over four years. The comparison looks like this:

• Stay put: about £26,000 of interest remains over the final three years.
• Refinance £140,000 at 9% over four years: payments drop to about £3,484 a month, freeing £1,100 a month of cashflow, with total interest of about £27,200.

The refinance costs slightly more in total interest because the term is longer, but the monthly saving funds an extra member of staff. Neither answer is automatically right. Check early repayment charges on the old facility, then decide whether cashflow or total cost matters more to your plans.

Three questions before you refinance

• What does exit cost? Early repayment charges and admin fees can erase a rate saving.
• Is the new rate genuinely lower, or just stretched? A longer term lowers payments while raising total cost — compare like for like.
• Has your credit profile improved? If yes, you may also beat your old rate outside the scheme entirely. A broker can test both routes at once.

Were you declined under RLS? GGS is a fresh start

A decline under RLS does not carry over. Lender appetite has shifted since 2022–2024: funding conditions have changed, new lenders have joined the panel and your business is older with more trading history. Many businesses declined late in RLS are approved under GGS.

Eligibility rules are also straightforward — UK trading activity, £45 million turnover cap and a viability assessment. Check the detail in our guide to Growth Guarantee Scheme eligibility before assuming you would not qualify.

Borrowing under GGS today

Applying works the same way RLS did: through an accredited lender or a commercial finance broker, never through the government directly. Each lender sets its own pricing and credit policy, so two lenders can offer very different terms for the same business.

Personal guarantees remain at the lender’s discretion under both schemes, but your main home cannot be taken as security. If that is a sticking point for you, our guide to personal guarantees on the Growth Guarantee Scheme covers the rules and your negotiating options. For wider context on the government-backed lending landscape, see our overview of government business loans in the UK.

How to apply under GGS: step by step

The application route is unchanged from RLS, so the process will feel familiar if you borrowed before.

Step 1: Define amount, purpose and product

Decide what you need, what it is for, and which product fits — term loan, overdraft, invoice finance or asset finance. The purpose shapes everything that follows.

Step 2: Prepare your evidence pack

Gather filed accounts, recent management figures, three to six months of bank statements and a one-page statement of purpose. Larger requests need a simple cashflow forecast showing the repayments are covered.

Step 3: Choose lenders deliberately

Accreditation is product-specific and appetite varies, so match lenders to your profile rather than applying blind. Going direct works for clean, straightforward cases; a whole-of-market broker earns its keep on everything else.

Step 4: Complete the application and declarations

Alongside normal underwriting, you confirm UK trading, turnover under £45 million and your subsidy position for the current and previous two fiscal years. The lender guides you through these scheme declarations.

Step 5: Review the offer properly

Check the rate, fees, term, security and any personal guarantee before signing. The guarantee terms are often negotiable, and your main home can never be taken as security. For grounding on offer documents generally, see how business loans work.

Common mistakes when moving from RLS thinking to GGS

• Assuming the scheme ended. RLS closed; guaranteed lending did not. GGS is open now and announced to run to 2030.
• Expecting Covid-era ease. Bounce Back Loans had no real underwriting. GGS uses full commercial credit checks — prepare accordingly.
• Believing the guarantee protects you. Under every version of these schemes, the guarantee protects the lender. You repay 100% of the debt.
• Re-applying only to the lender that declined you under RLS. The panel reset and appetite moved. Cast wider.
• Forgetting old scheme debt in affordability. Lenders count outstanding RLS, CBILS and Bounce Back repayments when testing whether new borrowing fits.

Your next step

If you understood the Recovery Loan Scheme, you already understand its successor: same guarantee level, same limits, broader purpose and a longer life. The practical question is which accredited lender suits your business now. As an FCA-authorised brokerage, we compare the market for you. Start with our Growth Guarantee Scheme funding page to see what your business could borrow.

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Written by

Andy Pickett

Chief Technology Director and AI Champion

Andrew is a Chief Technology Officer with over 15 years’ experience in IT and telecommunications, leading the design and delivery of robust, scalable technology solutions.

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