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• 08 Mar

  The Recovery Loan Scheme And Alternatives

  

  Recovery Loan Scheme (RLS)

  The Recovery Loan Scheme (RLS) is a new government-backed loan scheme announced in the Spring 2021 budget. It is a scheme to support the growth of UK businesses as they grow and recover from the effects of the Covid-19 pandemic. The scheme launches on the 6th of April 2021 and will be open until 31st December 2021, through a list of accredited lenders.

  UPDATE: THE RECOVERY LOAN SCHEME IS NOW CLOSED BUT SEE THE ALTERNATIVE OPTIONS

  CBILS & BBLS Close 31st March 2021

  The existing loan schemes, the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) are due to close to new applications on the 31st March 2021. The new RLS will ensure that businesses still have access to financial support after those schemes close.

  How It Works

  The RLS is for businesses of any size and enables them to access a loan of between £25,001 and £10 million or invoice finance from £1,000 up to £10M. The money can be used for any legitimate business purpose including growth and investment. The government will guarantee 80% of the value of the loan, to the lender. This will ensure access to funding for businesses that might not meet the criteria for other lending.

  Criteria 

  To apply for a loan you must be a business trading in the UK (please note that FundInvoice only deals with UK limited companies). To be eligible your business must have been viable were it not for the pandemic, you must have been impacted by the pandemic and not subject to insolvency proceedings.

  Businesses that were supported under the previous Covid-19 guaranteed loan schemes will still be eligible for this scheme. Certain types of organisations are not eligible (see the government's  Recovery Loans Scheme guidance for details).

  Affordability

  There will be affordability checks for this scheme (a new addition), which may be an issue for some applicants. Also, as only 80% of the loan value is guaranteed by the Government, the lender will be assuming the remaining 20% of the risk. This could cause them to become more circumspect in their loan approval decision-making.

  Alternatives To The Recovery Loan Scheme

  Even if you don't meet the criteria for the Recovery Loan Scheme, fail to qualify, or are rejected for any reason, there are still likely to be other alternative forms of business finance available to you. If you are subjected to insolvency proceedings, such as being in a CVA, even if you don't qualify, there are alternative forms of finance that you can still access. We are in touch with a large variety of alternative finance companies that will provide funding to companies that are not in great financial health.

  Please call Sean on 03330 113622 for support, and to discuss the alternatives.

  By Glenn Blackman