The Government has extended the Recovery Loan Scheme (RLS) by a further two years, the loan was originally introduced in April 2021 to support businesses across the UK as they recovered following the coronavirus pandemic.
Details have now been released on this new iteration of the RLS aimed at helping businesses access the finance they need to invest and grow.
British Business Bank figures show that £4.51bn of lending has been offered to almost 20,000 businesses. Accredited lenders have offered £438m to smaller businesses in the East of England – representing 10% of the national total.
The Scheme
The structure of the scheme remains essentially the same, with businesses able to choose from term loans, overdrafts, asset finance and invoice finance – although not all lenders will be able to offer all of these options.
Businesses can use the finance for any legitimate business purpose, including managing cashflow, investment and growth. However, they must be able to take out additional debt finance for these purposes.
- The maximum amount of finance available will be £2 million per business;
- Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and at £25,001 for term loans and overdrafts;
- Term loans and asset finance facilities are available from three months up to six years;
- Overdrafts and invoice finance are available from three months up to three years;
- The annual effective rate of interest and upfront and other fees cannot be more than 14.99%; and
- The guarantee coverage that the Government will provide to lenders remains at 70%.
A new addition to the criteria is that lenders may now require a personal guarantee from the borrower, in line with standard commercial practice. Principal Private Residences cannot be taken as security within the Scheme.
Eligibility
- The Scheme is open to smaller businesses with a turnover of up to £45m;
- The borrower must be carrying out trading activity within the UK and, for most businesses, generating more than 50% of its income from trading activity;
- Unlike the previous iteration of the scheme, for most borrowers, no Covid-19 impact test is required;
- Borrowers will need to provide written confirmation that receipt of the RLS facility will not mean that their business exceeds the maximum amount of subsidy they are allowed to receive; and
- Businesses will need to provide certain evidence to show that they can afford to repay the facility.
Banks, building societies, insurers and reinsurers (excluding insurance brokers), public-sector bodies and state-funded primary and secondary schools are not eligible under RLS.
Lenders
Businesses should approach lenders themselves, via their website, to apply for the funding.
Accredited lenders are being added to the British Business Bank website once they are open for applications.
Current accredited lenders include:
- Bank of Scotland;
- BCRS Business Loans;
- Coventry and Warwickshire Reinvestment Trust (CWRS);
- Genesis Asset Finance;
- HSBC UK;
- Lloyds Bank;
- NatWest; and
- Royal Bank of Scotland.
See current accredited lenders on the British Business Bank website.