If your business has ever been turned down for a loan, or accepted terms you knew were too tight, this matters. Chancellor Rachel Reeves has announced the most significant SME finance reforms in years, revealed on 12 July 2026 ahead of her third Mansion House speech on 14 July. The package more than doubles lending capacity under the Growth Guarantee Scheme, opens new funding routes for exporters and IP-rich firms, and commits fresh resources to community lenders. The question is whether the money will reach the businesses that most need it.
For women running businesses, that question is sharper still. Only one in five UK businesses is female-led, according to Funding Circle analysis of UK Gender Index data (2026). Female owner-directors account for just 10 per cent of all entrepreneurs with personal guarantee insurance, per Purbeck Insurance data (March 2026). When lending widens, it matters most to those currently locked out.
What the Mansion House package contains
The headline measure is a significant expansion of the Growth Guarantee Scheme (GGS). The GGS provides a 70 per cent government guarantee on commercial loans to SMEs of up to £2 million. It cuts risk for lenders and makes borrowing easier. The chancellor confirmed the scheme will scale up to support an additional £2 billion of SME lending per year by 2028/29. That takes total annual lending from £1.35 billion to £3.35 billion, more than doubling current capacity.
The expansion raises the number of businesses helped from 8,000 to 20,000 per year. That means 12,000 additional SMEs will gain access to finance annually.
Three further changes broaden who can apply and on what terms:
- Longer repayment terms: The maximum loan term rises from six to ten years for loans of up to £1.1 million. This gives businesses more breathing room on repayments.
- Higher turnover threshold: Eligible business turnover increases from £45 million to £54 million. More growing firms now fall within scope.
- More lending capacity: Major banks have responded with their own commitments. Lloyds, NatWest, and Allica Bank have each committed £1 billion of SME lending over the next three years.
Martin McTague, National Chair of the Federation of Small Businesses (FSB), welcomed the changes. He noted that expanding resources and extending payment terms should help small businesses build wealth across the country.
Support for innovation and exports
Beyond the GGS expansion, the package includes two further pillars. Both target businesses that have historically struggled with traditional bank lending.
The first is a £500 million allocation through the British Business Bank’s ENABLE Guarantee programme. It targets SMEs rich in intellectual property (IP). Businesses whose main assets are intangible, such as patents, trademarks, and software, often find it harder to secure loans. Traditional lenders prefer physical assets as collateral. This new funding stream aims to change that dynamic over the next 12 months.
The second is a new UK Export Finance (UKEF) guarantee scheme for small businesses starting to export. Many SMEs with strong products lack the financial backing to enter international markets. The new guarantee product should reduce the risk for businesses taking their first steps into overseas trade.
For women-led businesses considering growth through exports or IP-intensive products, these measures create new routes to funding. If you are deciding whether to structure as a sole trader or a limited company before pursuing this type of finance, our guide to sole trader vs limited company explains the key differences.
Why community lenders deserve your attention
A less-discussed but potentially transformative element is the government’s renewed commitment to community finance. Community Development Finance Institutions (CDFIs) serve businesses and entrepreneurs who struggle with mainstream lending. They matter most for founders in underserved areas and those without conventional credit histories.
The British Business Bank has accredited several CDFIs through its Community ENABLE Funding programme. The Community Finance Taskforce, launched in early 2026, brings together banks, community lenders, and government to grow the sector. This is not headline-grabbing, but it is consequential. If a high-street bank has turned your business down, a CDFI may be a more realistic starting point than a government guarantee scheme you access through that same bank.
For women setting up a business today from home, operating in areas with limited banking infrastructure, or building businesses without significant personal assets, CDFIs offer both finance and business support that high-street banks typically do not.
Ring-fencing reforms could unlock further billions
Running alongside these direct lending measures, the government has published its review of ring-fencing rules for major banks. Ring-fencing requires large banking groups to separate core retail banking from riskier investment activities. This protects depositors but restricts how much capital banks can deploy to business lending.
The proposed reforms include a New Growth Allowance. The Treasury says this could enable up to £80 billion of additional financing for UK businesses. This money will not flow immediately; it is a structural change to how banks allocate capital. Lower capital requirements for domestically focused banks under revised Basel 3.1 rules should also boost competition in the lending market.
For SME owners, more competition among lenders typically means better rates and more flexible terms. But this is a long game. Do not expect the ring-fencing changes to affect your next loan application. The GGS expansion will be felt first.
Why this matters for women in business
The funding gap facing women-led businesses remains stubborn. Funding Circle’s 2026 analysis of UK Gender Index data confirms only one in five UK businesses is female-led. Representation varies dramatically by sector.
Grant Thornton’s Women in Business 2026 report paints a concerning picture at leadership level. The proportion of female CEOs in UK mid-market companies fell from 24 per cent in 2025 to 17 per cent in 2026. That is the lowest level in eight years. Read that again: progress is not merely stalling, it is reversing.
The package does not include measures specifically targeted at women-led businesses. That is a missed opportunity. However, several elements stand to benefit women founders disproportionately. Community finance expansion addresses founders who lack traditional collateral or credit histories. Longer loan terms reduce monthly repayment pressure, which matters for businesses growing steadily rather than chasing rapid scale. The IP-focused funding stream opens doors in technology, creative industries, and professional services, where women are increasingly well represented.
The British Business Bank itself has recognised the need to act. In May 2026, it pledged £1 million to co-invest with Angel Academe, a founding signatory of the Investing in Women Code. The investment supports women founders through its EIS fund managed by SyndicateRoom. It is a start, but £1 million against a multi-billion-pound lending landscape underscores how far there is still to go.
What to do now: practical next steps
If you run a small business, there are concrete actions you can take in response to these announcements.
- Check your GGS eligibility. If your turnover is under £54 million, you may now qualify. Contact the British Business Bank or your existing lender to explore options.
- Review your loan terms. If you hold a GGS-backed loan, the new ten-year terms for loans up to £1.1 million may allow restructured repayments.
- Explore community finance. If mainstream lenders have turned you down, look into CDFIs accredited through the Community ENABLE Funding programme. They operate regionally and often pair finance with business support.
- Consider export finance. The new UK Export Finance guarantee could help if your products or services have international potential.
- Talk to your accountant. New lending options interact with your business structure, tax position, and growth plans. A professional conversation now could save time later.
The London Chamber of Commerce and Industry has welcomed the SME finance boost, but caution persists. Its research found 49 per cent of London firms believe the government’s current approach to the economy will worsen growth conditions. Policy announcements matter; execution matters more. The real test is whether the money reaches the businesses that need it, not just the ones banks already wanted to lend to.
For more on funding options available to women-led businesses, see our guide to grants for women in business. You can also explore your options on our finding funding page, or review the latest data on our women in business: key UK facts page.
