Recovery Loan Scheme
A new Government-backed loan, the Recovery Loan Scheme, will provide access to finance for UK SME as they grow and recover from the pandemic.
On the 3rd March 2021 at the Budget, Rishi Sunak, alongside the Government announced the Recovery Loan Scheme, a new finance programme that will replace the existing Covid-19 loan schemes, (the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan Scheme (BBLS)), would launch on 6th April 2021.
The scheme will run until 31st December 2021, subject to review.
What finance is available?
According to GOV.UK:
· Term loans and overdrafts will be available between £25,001 and £10 million per business.
· Invoice finance and asset finance will be available between £1,000 and £10 million per business.
Up to six years for term loans and asset finance and up to three years for invoice finance and overdraft facilities.
No personal guarantees will be taken on facilities up to £250,000 and a borrower’s principal private residence cannot be taken as security.
You are eligible for the Recovery Loan Scheme providing proof that:
· You’re a UK trading business
· Your business is viable or would be viable were it not for the pandemic
· Your business has been impacted by the coronavirus pandemic
· Your business is not in collective insolvency proceeding
Unlike the other Coronavirus Loan Schemes, the Recovery Loan Scheme doesn’t have any turnover restrictions; businesses of any size can apply for finance.
Businesses which have taken out a CBILS, CLBILS, BBLS facility previously will be able to access the new scheme.
Businesses from any sector will be eligible to apply, except:
· Banks, building societies, insurers and reinsurers (but not insurance brokers)
· Public-sector bodies
· State-funded primary and secondary schools
The RLS can be used for any legitimate business purpose, including:
· Provide a cash flow injection
· Pay a one-off expense
· Grow your business
· Help with payroll
· Purchase new equipment
· Invest in marketing
The Recovery Loan Scheme may enable you to finance an asset that wouldn’t usually be accepted by a lender. For instance, biomass boilers can be tricky to fund, but the RLS could make access to funding more accesible.
Our expert broker team is continuing to assist many of our customers throughout the coronavirus pandemic.
We are keeping a close watch for further details to be released regarding the new Recovery Loan Scheme.