What the government’s financial services growth and competitiveness strategy actually means for your business

At her Mansion House speech on 14 July, Chancellor Rachel Reeves confirmed a series of reforms to small business finance in years. Behind the Treasury language, there's a simple story: the government is trying to make it easier for lenders to say yes to businesses that have historically heard no. Here's what's changing, and what it means in practice for your business.

£2bn more a year through the Growth Guarantee Scheme

The centrepiece of the package is an expansion of the British Business Bank's Growth Guarantee Scheme (GGS). It currently works by giving lenders a 70% government guarantee on commercial loans of up to £2 million, which reduces the lender's risk and, in theory, turns more "nos" into "yeses." Since launching in 2022, the scheme has supported over £3.7 billion of financing, with £2.5 billion of that reaching businesses outside London and the South East.

The Chancellor outlined that the scheme will scale up to support an extra £2 billion of SME (small business) lending a year by 2028/29, taking total annual lending backed by the scheme from £1.35 billion to £3.35 billion. The British Business Bank estimates this will help an additional 12,000 businesses a year, more than doubling the 8,000 currently supported to 20,000.

Nicholas Richardson, Head of Funding at Capitalise, said:

"Despite its profile, the Growth Guarantee Scheme remains underleveraged with lender risk appetite often the limiting factor rather than borrower demand.

This scale of expansion matters because it's not just about more capital going into the scheme, it's about more lenders having an appetite to use it. We regularly see viable businesses get turned down because a lender's risk appetite doesn't quite stretch far enough. A bigger guarantee pot gives lenders more room to move on deals they'd otherwise pass on. The scheme is well known. The question is whether this expansion translates into lenders actually deploying it."

Longer terms and a higher turnover cap

Two changes to the scheme's terms could matter as much as the extra funding. The maximum loan term for loans up to £1.1 million is being extended from six to 10 years, and the turnover threshold for eligible businesses is rising from £45 million to £54 million. A longer term spreads repayments out, which can ease monthly cash flow pressure on a growing business, particularly one investing in equipment, premises or hiring where the payback takes time to materialise.

£500m for innovative businesses

Beyond the Growth Guarantee Scheme, the British Business Bank is allocating £500 million of its ENABLE Guarantee programme to support SMEs and scale ups that are rich in intellectual property, but light on the physical assets lenders traditionally want as security. The government has pointed to creative industries and life sciences as sectors that should benefit, alongside its wider ambition to strengthen the UK's position in innovation and AI.

Hacina Smaini, Head of Marketing at Capitalise, said:

"Intellectual property rich businesses struggle to fit the standard lending model, because they simply can't offer a building or a fleet of vehicles as security. This allocation is a recognition that the asset used to secure a loan doesn't need to be physical for the business behind, those businesses need that access finance."

A leg up for businesses locked out of mainstream lending

The reforms also strengthen support for Community Development Finance Institutions (CDFIs), lenders that specialise in businesses that mainstream banks turn down. JP Morgan Chase and BNY have committed a combined package of philanthropic and financial support, including £10 million from JP Morgan Chase, to build up the sector's capacity.

Through the British Business Bank's Community ENABLE Funding programme, seven CDFIs have already been accredited and nearly £120 million of government funds committed, with an ambition to grow the programme to at least £500 million. A Community Finance Taskforce Roadmap, due early next year, is expected to set out how the sector signposts businesses that have been turned down for credit elsewhere. Collectively, the government estimates these efforts could unlock an additional £1 billion of SME lending over the next five years.

A safety net for exporters from spring 2027

A new portfolio guarantee scheme, delivered jointly by UK Export Finance and the British Business Bank, is set to launch in spring 2027. It's designed to make lending more available to smaller businesses that export or want to expand into international markets, an area where finance has historically been harder to access than for domestic trade.

Wider steps for growth: Business Growth Service, Open Finance and building societies

A handful of supporting measures round out the announcement. The Business Growth Service, which has supported 750,000 users since launch, will move into its next phase with a new financial readiness programme built around financial education and access-to-finance support.  The government will consult in 2027 on Open Finance for SME lending, aimed at making it easier for businesses to share financial data securely with lenders. Legislative barriers preventing building societies from lending to SMEs are being removed. And a review of ring-fencing rules has been published, including a proposed "New Growth Allowance" intended to free up financing for scale-up firms, with a formal consultation to follow.

What this means for your business

Rachel Reeves put it plainly: when small businesses succeed, we all succeed. These plans intend to see just that. Business Secretary Peter Kyle also added that "access to finance should never be the barrier between a good idea becoming a great British business." Lenders are already responding, NatWest has said it expects to lend around £1 billion through the scheme over the next three years, Lloyds up to £1 billion by 2029, and Allica Bank over £8 billion in SME lending over the same period.

None of this changes overnight, and a bigger guarantee scheme won't turn a weak application into a strong one. What it does though, is widen the pool of lenders with genuine capacity to say yes, particularly for businesses that have been rejected before on term length, turnover size, or a lack of physical security.

Nicholas Richardson, Head of Funding at Capitalise, added:

"Our message to any business thinking about this is the same as it always is: know your numbers before you go to a lender. Understanding your financial health gives you a clearer sense of how your business is likely to be viewed by lenders and which finance options may be realistic. That’s true whether you’re applying through a high street bank or an alternative lender."

More lending capacity and more schemes also means more options to weigh up, and working out which one actually fits your business needs isn't always straightforward. With Capitalise, you can compare 130+ lenders in one place and get support from a dedicated funding specialist, so you're not left trying to match your business against every scheme on offer alone. If you're not sure where your business stands, checking your credit score is a good first step before approaching any lender. You can sign up to check your credit score today.