How government-backed loans work
With most government-backed schemes, the loan comes from a normal lender such as a bank. The government guarantees part of the loan to the lender, which can make lenders more willing to lend, but the business remains fully responsible for repaying all of it.
In the UK, current schemes include the Growth Guarantee Scheme and Start Up Loans. Earlier schemes such as Bounce Back Loans and CBILS are closed to new borrowers.
Worked example
Borrowing £50,000 at 7% over 5 years costs £990.06 a month, £59,403.60 in total.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Interest rates
Under guarantee schemes, the lender usually sets the interest rate and fees, so rates vary between lenders. Use the rate from your offer.
Inputs for the government business loan calculator
Amount to borrow
The amount your business wants to borrow.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
CALCULATOR QUESTIONS
Government business loan calculator questions
Who lends a government-backed business loan?
Usually a bank or other accredited lender. The government guarantees part of the loan to the lender.
Does the government guarantee mean I don't have to repay?
No. The guarantee protects the lender. Your business remains liable for the full amount.
Which UK schemes are open?
The Growth Guarantee Scheme and Start Up Loans are current UK schemes. Bounce Back Loans and CBILS have closed to new applications.
Does this include fees?
No. Add any arrangement fees from your offer when comparing costs.