Can I combine a sustainability loan with UK grants, incentives or the Growth Guarantee Scheme?
Short answer and immediate guidance
Yes — in many cases you can combine a sustainability loan with UK grants, tax incentives or the Growth Guarantee Scheme, but the ability to mix funding depends on the specific scheme rules, lender conditions and state aid or double‑funding restrictions.
Before you apply, check the terms of each grant or incentive, the lender’s conditions for the sustainability loan, and any state aid rules that might limit stacking support.
What is a sustainability loan?
A sustainability loan is a commercial loan where proceeds are used for environmental or energy‑efficiency projects and where pricing or covenants may be linked to meeting sustainability targets.
These loans can support measures like solar panels, LED retrofits, heat pumps, EV charging, low‑carbon equipment or broader energy‑saving capital expenditure.
How Best Business Loans helps
We don’t supply loans directly but our AI matching platform helps UK businesses find lenders, brokers and financing routes that suit sustainability projects, including options tailored to combine with grants and incentives.
Start with a Quick Quote to see which lenders and brokers could support your sustainable investment and whether your project is likely to qualify for mixed funding.
Learn more about eligibility for sustainability loans on our detailed guide: Sustainability loans.
Combining sustainability loans with UK grants and incentives
Types of grants and incentives commonly available
The UK offers a variety of grants and incentives for green projects, including local authority grants, devolved nation programmes, Innovate UK competitions, the Public Sector Decarbonisation Scheme (for eligible bodies), and capital grants for energy efficiency.
Tax incentives such as Enhanced Capital Allowances, the super‑deduction (where applicable), and R&D tax reliefs can also improve project economics for eligible businesses.
Can grants and loans be used together?
Often they can, but the rules vary: some grants are designed to top up commercial finance and explicitly allow complementary loans, while others require that a grant is the sole source of funding for the specified cost.
Common structures include (a) grant funding that reduces overall project cost with the loan covering the remaining capital, (b) grant funding used for feasibility or planning and a loan used for implementation, and (c) loans linked to performance where grant funding is permitted so long as outcomes are measured and reported.
Practical steps to combine grant and loan funding
Step 1: Read the grant terms carefully and seek written confirmation from the grant provider about whether external loans are permitted for the same project costs.
Step 2: Identify lenders that accept mixed‑funding deals and ensure your lender reviews grant documentation during underwriting to avoid conflicts over permitted uses.
Step 3: Keep transparent records and separate cost lines in budgets and invoices so auditors can clearly see what grant paid for and what the loan funded.
How the Growth Guarantee Scheme fits with sustainability lending
What is the Growth Guarantee Scheme?
The Growth Guarantee Scheme (GGS) is a government‑backed initiative designed to improve access to finance for growing UK businesses by sharing credit risk with lenders, thereby encouraging them to lend to viable SMEs.
The scheme supports a range of commercial lending types but has specific eligibility rules and lender participation criteria.
Can you use a sustainability loan under GGS alongside grants?
Yes — a sustainability loan provided through a participating lender under the Growth Guarantee Scheme can often be combined with grants and incentives, subject to the scheme’s rules and any restrictions in the grant terms.
Key checks include whether the loan purpose fits GGS definitions, whether the lender has accepted the guarantee for that deal, and whether the grant maker allows guaranteed lending to be used for the same project costs.
How lenders treat guarantees when grants are present
Lenders participating in GGS will perform standard credit and eligibility checks and will want clarity on any grant income or expected grant disbursements because grants affect the project cashflow and risk profile.
Transparent disclosure of grant amounts, timelines and any clawback or reporting obligations is essential for lender underwriting and for ensuring GGS requirements are met.
Compliance, state aid and practical cautions
State aid and double‑funding risks
If a grant is public money or has state aid characteristics, combining it with other public support or guaranteed lending may trigger state aid rules or double‑funding restrictions.
You should check with the grant provider or legal adviser whether stacking different public supports is permitted and whether any de‑minimis or block exemption thresholds apply.
Lender and grant provider conflicts to watch for
Some lenders may treat grant proceeds as prepayment of costs and adjust the loan amount, or they may require the grant to be applied first to reduce the loan.
Other lenders may allow parallel funding but will insist on covenants that require evidence of how each funding element is used and may exclude grantable items from the loan security.
Timing, reporting and audit considerations
Grant programmes often require evidence of project delivery, proof of expenditure and ongoing performance reporting; ensure your loan agreement allows you to provide the required evidence without breaching covenants.
Plan sequencing carefully: some grants pay after completion, some pay upfront, and this affects cashflow — consider bridge finance or staged drawdowns from lenders to manage timing mismatches.
Tip: get written clarity
Always obtain written confirmation from the grant provider and the lender that combining funds is acceptable and document any conditions or clawback liabilities before drawing down the loan or committing to project spend.
Practical checklist, next steps and how Best Business Loans can help
Quick checklist before combining funds
- Confirm grant terms allow external finance to be used for the same costs.
- Check whether the Growth Guarantee Scheme applies to your loan and that the lender participates in GGS.
- Disclose grant amounts and timelines to your lender during the application.
- Confirm whether public funding creates state aid or double‑funding issues for your project.
- Agree who pays what and keep clear, auditable invoices and payment trails.
If you follow this checklist you reduce the chance of unexpected clawbacks, covenant breaches or funding gaps that can delay delivery.
How to approach lenders and grant providers
Prepare a single, clear project budget showing total costs, grant elements and proposed loan finance, and provide the grant guidance or award letter to any lender you approach.
Ask lenders about staged drawdowns and whether they can accommodate grant timing, and if you plan to use the Growth Guarantee Scheme, confirm the lender’s ability to make a GGS application.
Why use Best Business Loans for this process
Our platform matches your business to lenders and brokers who understand sustainability projects and the practicalities of combining grants, incentives and guaranteed lending.
We can help you identify lenders that participate in the Growth Guarantee Scheme, clarify lender documentation needs, and speed up eligibility checks so you avoid wasted applications.
Call to action — get your Quick Quote
Complete our Quick Quote form to get an AI‑driven match to lenders and brokers who accept mixed funding structures and who regularly handle sustainability projects.
Submitting a Quick Quote is free and non‑binding, and it helps reveal whether your project is likely to qualify for a sustainability loan combined with grants or GGS support.
Key takeaways
- Combining a sustainability loan with UK grants, incentives or the Growth Guarantee Scheme is often possible but not automatic, and depends on the rules and parties involved.
- Check grant terms, disclose funding to lenders, and watch for state aid or double‑funding restrictions.
- Document budgets clearly, manage timing mismatches, and seek written confirmation from grant makers and lenders before drawing funds.
- Use specialist brokers or platforms like Best Business Loans to match with lenders who understand sustainability projects and mixed funding structures.
For tailored guidance, start a Quick Quote to see which lenders and brokers are best placed to support your sustainability project and funding mix.