We have been talking to our clients about the Recovery Loan Scheme (RLS) which has been Introduced to replace the Coronavirus Business Interruption Loan Scheme (CBILS) which ended on the 31st March, the RLS being designed to help businesses of any size access loans and other kinds of finance so they can recover after the pandemic and transition period. It is expected to be available until 31st December 2021 but is subject to review.
The actual amount offered, up to a maximum £10m, and the terms are at the discretion of participating lenders, with the Government providing a 80% guarantee of the debt to the lender although the borrower remains 100% liable for the debt.
You can apply for a loan if your business is trading in the UK and you can demonstrate your business:
- has a borrowing proposal which would be considered viable by the lender.
- has been adversely impacted by the pandemic
- is not in collective insolvency proceedings
- is a UK trading company that generates more than 50% of its turnover from trading activity
Businesses that received support under the earlier COVID-19 guaranteed loan schemes are still eligible to access finance under this scheme if they meet all other eligibility criteria.
The RLS covers term loans and overdraft facilities in addition to invoice and asset finance. No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
Unlike with CBILS, businesses will be required to meet the costs of interest payments and any fees associated with the facility from the outset under the RLS. Lenders are required to undertake credit and fraud checks for all applicants to the RLS.
If you require more help or advice, please contact Malcolm Baker on 01202 715950