UPDATE – At the Autumn Budget 2021, the government announced that the Recovery Loan Scheme (RLS) will be extended by six months and will now end on 30 June 2022.

On 1 January 2022 the following changes will come into force and will apply to offers made after this date:

  • The scheme will only be open to small and medium sized enterprises with a turnover of less than £45m,
  • The maximum finance available will be £2m per business with a maximum of £6m across a group),
  • The guarantee coverage that the government will provide to lenders will be reduced to 70%.

The following was originally published on 13 September 2021.

Time is running out for your small business to secure post-pandemic finance via the Government’s recovery loan scheme

Launched by Chancellor Rishi Sunak back in April 2021, the scheme aims to  help businesses obtain finance to recover and grow after the pandemic.

Lenders, however, are reporting weak demand among the UK’s small businesses ahead of the 31 December 2021 deadline for applications. 

Some firms that want to access this state-backed credit are finding difficulties securing it, which is having a domino effect on demand.

Reports suggest some providers are also using their own discretion to only lend to firms with a certain turnover or with a good credit rating. 

But don’t let that put you off. For every lender like that, there will be other providers that are willing to help. 

The recovery loan scheme is open to businesses that also claimed previous pandemic loan schemes. 

These include the now-closed business interruption loan and bounce-back loan schemes, which provided £74 billion of state-backed finance.

What are recovery loans?

The recovery loan scheme provides credit worth up to £10 million per business and comes with an 80% government guarantee for lenders. 

As long as your business continues to trade in the UK, you could be eligible for this additional government support. 

Your business needs to show how it was adversely affected by COVID-19, or how it would be viable were it not for the pandemic. 

Eligible firms can claim term loans or overdrafts of between £25,001 and £10m per business, invoice or asset finance of between £1,000 and £10m. 

You have up to three years to pay off the overdraft or invoice finance, or up to six years for term loans and asset finance. 

No personal guarantees will be taken on facilities up to £250,000, and your main residence (home) cannot be taken as security.

If successful, the funds can be used for any legitimate business purpose, including managing cashflow, growth and investment. 

How to apply?

The recovery loan scheme is facilitated by the British Business Bank, which has 64 accredited lenders around the UK. 

What options you have depends on where you are in the UK and the type of finance your business requires. 

You can filter the type of finance you want to secure by region to whittle down the list of providers near you. 

The deadline for applications is 31 December 2021. 

While we cannot apply on your behalf, we are in a position to pass on this information and give you a nudge about this state-backed finance option. 

Cashflow projections and having your latest financial accounts are useful when it comes to supplementing your application for a recovery loan. We can certainly help you with those elements. Email info@jamesscott.com or call us on 0161 653 2274 to find out more.