Recovery Loan Scheme
In reaction to the Covid-19 pandemic, the Recovery Loan Scheme was launched by the government on 6 April 2021 to help UK businesses access finance as they recover and grow during the transition period. The scheme is available until 31 December 2021, subject to review.
This scheme replaces all other schemes related to the pandemic, including the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS). If you have already borrowed money through one of the aforementioned schemes, you can still apply for finance through the new scheme but you may be limited in the amount you’re able to borrow.
While up to £10 million is available per business, the actual amount and terms offered are at the discretion of participating lenders. Loans and finance options are available through a network of accredited lenders. The list of lenders is continuously updated and managed by the British Business Bank.
It’s important to remember that while the government guarantees 80% of the finance, that guarantee is to the lender. As the borrower, it’s the business taking out the loan that’s 100% liable for the debt. In this way, the government is encouraging lenders to offer finance.
The Business Recovery Loan Scheme is in place to help businesses that have been affected by the pandemic. From improving cash flow to investing in growth, the facility is available for any business purposes. The main aim of the scheme is to improve the finance terms available to businesses following this difficult period. A lender should offer the best terms, even if that means an alternative loan with better terms than that available with the government Recovery Loan Scheme.
Eligibility
Loan applications are welcomed from businesses of all sizes, operating within all sectors, provided they are trading in the UK. Each business needs to show that it has been adversely impacted by the pandemic. Furthermore, a business’ performance will be scrutinised to ascertain whether it was a viable proposition before being affected by the fallout from the pandemic.
A standard Recovery Loan Scheme credit check will be carried out by the lender, alongside the usual fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Lenders may overlook any concerns over short-to-medium term performance when making their assessment; thereby taking the negative impact of the pandemic into account.
While there is no turnover restriction for businesses accessing the scheme, an organisation will need to provide evidence to show that they can afford to make the repayments. As such, any business in collective insolvency proceedings would not be eligible. Additionally, banks, building societies, insurers and reinsurers are also ineligible. So too are public sector bodies and state-funded primary and secondary schools.
Terms
While the government paid the interest on loans for the first 12 months with the other Coronavirus support schemes, this is not the case with the Recovery Loan Scheme. In this instance, a business will need to pay interest and applicable fees from the outset. Rates are capped at 14.99% per annum. Terms depend on the finance product chosen. Loans and asset finance facilities are available up to six years, whereas overdrafts and invoice finance for up to three.
During the pandemic and in the wake of its aftermath, we have strived to find businesses the ideal financial solutions to help them navigate this unchartered economic territory. We work with a wide range of lenders to bring you the best deals. Our goal is to find the best financial solution to suit you. Following the downturn, let us help your business flourish.