Recovery Loan Scheme replaced by The Growth Guarantee Scheme

This week, the British Business Bank announced that the Recovery Loan Scheme (RLS) is being replaced by the ‘Growth Guarantee Scheme’.

The change will take effect from the 1st July 2024 and will remain in place until 31 March 2026.

What does this mean for SMEs?

Full details about the new Growth Guarantee Scheme have not yet been released, but the expectation is that it will be similar to what is currently being offered through the current version of the RLS.

Unlike the two previous versions of the RLS, some key benefits have been removed such as no personal guarantees and interest payments covered, but UK based businesses have still benefitted and over £1 billion has been lent under the current version of the scheme.

The current scheme includes:

·       Government guarantee to the lender – 70% of balance

·       Maximum of £2 million borrowing per business group

·       Minimum of £1,000 facility size for asset or invoice finance

·       Minimum of £25,001 facility size for term loans or overdrafts

Typically a business funding client would need to fulfil a lenders risk appetite based on their personal security alone, but by the government providing security against 70% of the balance, the lenders should be able to satisfy their conditions and allow more finance facilities to be approved.

Are you looking for business finance? If you would like to find out if your business qualifies for a loan under The Growth Guarantee Scheme, just get in touch and we can discuss your options.