Why is subsidy control relevant in the Growth Guarantee Scheme?
Facilities provided through the Growth Guarantee Scheme (GGS) are subsidies. This is because these facilities are supported by the government, and they give an advantage to the business that receives them. While the business remains liable to repay 100 per cent of the GGS facility provided by a lender, the facilities are backed by a government guarantee which enables the lender to provide the facility to the
Subsidies come in different forms, and the giving of subsidies is governed by UK law. However, if a business is in scope of the Northern Ireland Protocol, European regulations will be relevant. If a business is not in scope of the Northern Ireland Protocol; GGS facilities are considered to be a subsidy in the form of Minimal Financial Assistance under the UK's Subsidy Control Act. If a business is in scope of the Northern Ireland Protocol, GGS facilities are subject to the European Commission's de minimis Regulations. These set thresholds for subsidies (called "State aid" under these rules) that can be provided to businesses. In both instances, there is a maximum amount of subsidy that can be paid to an entity or group of entities engaged in economic activity over a period of three fiscal years (although, depending on the location and type of business, there are some differences in how the three-year period is calculated, as noted below For GGS this is defined as the borrower or, where applicable, the borrower's group. If you have questions about what constitutes a "group" for GGS purposes, your lender may be able to help. You can also refer to the GGS FAQs here. If a borrower or its group has received certain other relevant subsidies it will affect the maximum they can access through GGS, potentially reducing it to zero (see: What is the maximum amount of subsidy that businesses are entitled to? Note that the amount of subsidy is not the same as the total amount being borrowed under an RLS facility. What does it mean for borrowers under the Growth Guarantee Scheme?
Determining whether your business is in scope of the Northern Ireland Protocol Read footnote text1 As part of the application process, businesses will be asked two short questions relating to the business's links to Northern Ireland, which will assess whether the business is in scope of the Northern
Confirming that your business isn't receiving more subsidy than it is entitled to All businesses will be informed by their lender that they will be receiving a subsidy as part of any potential new GGS facility. As mentioned above, for businesses not in scope of the Northern Ireland Protocol this will be Minimal Financial Assistance under the UK's Subsidy Control Act. For businesses in scope of the Northern Ireland Protocol, this will be a subsidy under the EU State aid de minimis Regulations. It is important to note that the amount of the subsidy and the amount the business is proposing to borrow are different. Lenders will inform businesses of this value.