UK Government’s Recovery Loan Scheme for Businesses
The Chancellor, Rishi Sunak announced the introduction of a new loan scheme as part of the Spring Budget measures to help business recover from the Covid-19 pandemic.
The Recovery Loan Scheme (RLS) will launch on 6 April following the closure of the current Coronavirus Business Interruption Loan and Bounce Back Loan schemes which cease at the end of March.
What do we know about the features of this new scheme, right now?
- Up to £10m facility per business: The maximum value of a facility provided under the scheme will be £10m per business. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
- Turnover limit: There will be no turnover restriction for businesses accessing the scheme.
- Wide range of products: Businesses will be able to choose from a variety of products: term loans, overdrafts, asset finance and invoice finance facilities.
- Term length: Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.
- Interest and fees to be paid by the business from the outset: Businesses will be required to meet the costs of interest payments and any fees associated with the facility.
- Access to multiple schemes: Businesses who have taken out a CBILS, CLBILS or BBLS facility will be able to access the new scheme, although the maximum they will be permitted to borrow will depend on their lender’s assessment and scheme requirements.
- Credit checks for all applicants: Lenders will be required to undertake credit and fraud checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.
Borrowers can use the Recovery Loan Scheme to fund cash flow, investment or growth.
How to Apply
The RLS will open on 6 April and Businesses are recommended to contact their bank or existing funders in the first instance to discuss this scheme and other options they may have available to them.
Full details of all the Covid-19 loan schemes can be found via the British Business Bank website.
Get in touch
If you have any queries regarding the Recovery Loan Scheme or the support available, please get in touch with your usual Azets contact.