Could we see a similar SBA loan scheme in the UK with Growth Guarantee Scheme?

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July 10, 2024

by a searcher from INSEAD in Windsor SL4, UK

Could we see a similar SBA loan scheme in the UK with this initiative.
Could this support the self funded search community.
With several Lenders recently pulling the plug on SME lending this would be greatly received.

https://www.british-business-bank.co.uk/finance-options/debt-finance/growth-guarantee-scheme

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Reply by a searcher
from London Business School in London, UK
This is the first I have seen this, and if it could evolve into an SBA7a type programme that would be hugely beneficial to the broader economy. I know of two businesses in our industrial park which did not exit into operating businesses - one just shut, the other is now self-storage. The owners would have sold to the employees but how could they arrange finance? It is not clear this programme is setup for that type of conversion, but I would hope if possible it could keep more companies operating. I imagine this would not be very welcome by purely financial backers looking to have cheap bolt-on options, hence I could imagine quite a bumpy ride to make this work in practice. Look at the recent articles about the plight the hard working non-doms in the Times and Telegraph today, one can see any threat to a level playing field will face real resistance. https://www.telegraph.co.uk/business/2024/07/10/labour-vat-raid-hitting-demand-high-end-house-purchases/ and https://www.thetimes.com/business-money/economics/article/top-london-property-prices-fall-on-school-fee-vat-and-non-dom-reforms-pv26kp3r2
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Reply by a searcher
in Northampton, UK
Unfortunately not. Whilst you may be able to use it for buyouts (it only launched a few days ago and no one has confirmed yet) you will only be able to borrow c2x EBITDA through it.

The guarantee part is always misleading - "Under the Government Guarantee Scheme, as with RLS, the government guarantees 70% of lending to each eligible business. In other words, the government underwrites 70% of what the lender could lose if a business defaults. Businesses are still liable for 100% of the borrowing." - the gov't is simply underwriting the bank if you cannot repay.

https://swoopfunding.com/uk/government-support/growth-guarantee-scheme/?utm_medium=email&_hsenc=p2ANqtz-_hzXaBy6qYtC3tyc7M6iOxEoy2H6n8aiI-hxAqLrp4U92GPJj5mJDExfc6vtraAXJkDeIbVk_fwtczDPQu3T6s9lfVug&_hsmi=###-###-#### &utm_content=###-###-#### &utm_source=hs_email
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