As the current Coronavirus Bounce Back Loans (CBBLs) and Coronavirus Business Interruption Loans (CBILs) close for new applications at the end of this month (March 2021), a replacement facility will be a welcome development for businesses forced to close or pare back activity during the pandemic.
The Recovery Loan Scheme (RLS), announced in the Chancellor’s recent budget, ensures that businesses of any size can continue to access loans and other kinds of finance (up to £10 million per business) once the existing Covid-19 loan schemes close. The RLS represents a shift in focus from survival to recovery and growth following the disruption of the pandemic and the end of the Brexit transition period.
The scheme will launch on 6th April 2021 and remain open until 31st December 2021, subject to review. Loans will be available through a network of accredited lenders, whose names will be made public in due course. However, major banks such as Barclays, Lloyds and Virgin Money have already signed up to the new scheme.
Once received, the finance can be used for any legitimate business purpose, including growth and investment.
The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.
Full details of the loan scheme will be available in the coming weeks leading up to the launch on 6th April.
What type of finance will be available?
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.
Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
Eligibility
Businesses will be able to apply for a loan if it is trading in the UK and provided the business is viable or would be viable were it not for the pandemic. Your business needs to have been impacted by the coronavirus pandemic and not in collective insolvency proceedings.
If your business has received support under the existing Covid-19 guaranteed loan schemes, you will still be eligible to access finance under this scheme, if you meet all other eligibility criteria.
If you would like to explore other funding routes, weigh up the pros and cons, and access approved providers, the Business West Finance Hub will provide useful information.
You can also contact Business West to access publicly-funded support services and discuss your finance, innovation and export needs with Innovate UK EDGE, The Department for International Trade and the Chambers of Commerce.
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