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Posted: Tue 14th Jul 2026
7 min read
Britain's small businesses are set to benefit from a £2 billion annual funding boost by 2028/29, as the government moves to address one of the most persistent barriers to growth: access to finance.
The expansion of the Growth Guarantee Scheme (GGS) comes as new data from Enterprise Nation's Small Business Barometer reveals the scale of demand, with 40% of small businesses planning to seek finance within the next 12 months.
The research paints a picture of an entrepreneurial community hungry for capital but navigating a complex landscape of funding options. Of those planning to raise finance, 13% said they will turn to traditional banks, 16% to SEIS/EIS tax-advantaged investment schemes, 6% to credit cards, and 9% to start-up loans.
"For too long they have heard 'no' when trying to raise the funds they need to grow and create jobs across the UK," said Chancellor Rachel Reeves, announcing the reforms in her Mansion House speech on Tuesday. "When they succeed, we all succeed."
"Every founder remembers the first time a lender said no. It knocks confidence, and many never ask again," said Polly Dhaliwal, COO of Enterprise Nation. "So, more than doubling the lending backed by the Growth Guarantee Scheme is important. Thousands more will hear yes when they ask for the money to grow.
"Our own research shows demand is there, but fragile. Today's announcement will only deliver if it reaches them."
The enhanced GGS will provide government-backed guarantees of up to 70% on loans of up to £2 million, giving lenders greater confidence to support viable businesses they might otherwise decline. Since its 2024 launch, the scheme has already channelled £3.7 billion to 8,000 SMEs.
Annual lending capacity will more than double from £1.35 billion to £3.35 billion, with the British Business Bank estimating the expansion will help 33,000 businesses access finance.
Crucially for businesses planning longer-term investments, maximum loan terms will extend from six to 10 years for loans up to £1.1 million, offering breathing space for firms to invest in equipment, premises, or product development without the pressure of rapid repayment.
The maximum eligibility threshold has also risen, with businesses earning up to £54 million annual turnover now able to apply, up from £45 million.
The funding is reaching businesses across the UK, with two-thirds of GGS lending to date going outside London and the South East, a geographic spread that Enterprise Nation says reflects where the growth potential truly lies.
"Across the UK, we hear from businesses that have the customers, the ambition and often the orders, but not the track record or confidence to secure the funding they need," Polly said.
The new backing for community lenders aims to unlock a further £1 billion for founders who struggle to access mainstream finance, with the Community ENABLE Funding Programme on track to deliver at least £150 million to community development finance institutions (CDFIs) by year-end.
In a move that could transform funding for creative, tech, and life sciences firms, £500 million has been allocated through the ENABLE Guarantee programme specifically for businesses rich in intellectual property but poor in physical collateral.
"Intellectual property is one of the most valuable but underleveraged assets on a company's balance sheet," said Kanishka Narayan, minister for AI and intellectual property. The funding aims to shift "IP-backed finance from the margins to the mainstream."
For entrepreneurs with patents, trademarks, or proprietary software – assets that traditional lenders have long struggled to value – this represents a potential breakthrough in accessing growth capital.
A new export finance scheme, launching in spring 2027 through UK Export Finance and the British Business Bank, will target smaller businesses with international ambitions. The programme will provide portfolio-level guarantees to lenders, reducing their costs and risk when backing exporters.
"One of our main business priorities is to make it easier than ever for SMEs to harness the power of international markets," said Tim Reid, CEO of UK Export Finance.
Enterprise Nation emphasised that money alone is not enough; businesses need help preparing applications that will succeed.
"Finance works best when it is paired with practical support, local networks and trusted advice," said Polly. "That is why the new financial readiness programme in the Business Growth Service will be key."
She pointed to research from the Community Finance Innovation Taskforce (CFIT) coalition, to which Enterprise Nation contributed, showing that helping firms get finance-ready before they apply could unlock a further £5 billion of lending annually.
The government's Business Growth Service, launched last July, will develop this financial readiness programme "informed by user research and intelligence about what businesses need".
"We look forward to helping the government make it work," Polly added.
For the 40% of small businesses planning to seek finance, the reforms offer multiple routes to capital depending on need and business model:
Traditional growth businesses with tangible assets and revenue can access larger loans on longer terms through GGS, making major investments more affordable.
IP-rich innovators in tech, creative, and life sciences sectors finally have dedicated funding routes that recognise intangible assets as valuable collateral.
Export-focused firms will find lenders more willing to back international expansion plans, with government guarantees reducing the perceived risk.
Underserved entrepreneurs who've faced rejection from mainstream banks can turn to growing community finance networks with dedicated funding.
"The British Business Bank's Growth Guarantee Scheme has a strong track record of enabling business growth," said Louis Taylor, the bank's CEO. "The additional capacity and greater flexibility provided will help even more businesses to invest, grow and create additional jobs."
Business Secretary Peter Kyle framed the package as removing barriers between ambition and achievement: "Access to finance should never be the barrier between a good idea becoming a great British business."
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