As the economy starts to reopen following the unprecedented impact COVID-19 induced lockdowns have had on UK businesses, you could be forgiven for thinking that we are returning to business as usual. In reality, a great deal of the UK’s small and medium-sized enterprises (SMEs) are living off an ever-increasing debt burden, with company borrowing to survive the pandemic expected to reach more than £60 billion net of repayments.

In this environment, there are still a number of resilient companies with strong underlying fundamentals which are, despite this, still at risk while their businesses recover and adapt to a post-COVID world.

With the Government-backed Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) now closed, many businesses may be wondering where they can access much needed credit as they continue to adapt to changing consumer behaviour.

In response, the Government has introduced the Recovery Loan Scheme (RLS) which is designed to help businesses recover and grow after the disruption caused by coronavirus. The scheme is currently due to run until 31 December 2021 and to help clarify the details, we’ve summarised the key things businesses need to know and what the scheme can do to help them.

How is this scheme different?

The BBLS and CBILS were specifically designed to enable businesses to access finance more quickly during the coronavirus outbreak, with the latter focussed specifically on financial support for smaller businesses across the UK that were losing revenue or seeing their cashflow interrupted. The RLS seeks to address the next step of funding requirements as companies look to the future and adapt their models to changing consumer habits as a result of the pandemic.

Who can apply for the scheme?

Businesses of any size, in any sector, can apply for funding of up to £10 million from accredited lenders (and up to £30m across a group), after a CIFAS check at the early stages of the application process to ensure that any fraudulent customers are identified, and as long as your business has been impacted by Covid-19, carries out trading in the UK and has a viable business proposition. If you can prove all three of these things to an accredited lender, you can use the funding for any legitimate business purpose, including managing cashflow, growing and investing in your business and it is designed to appeal to businesses that can afford to take out additional finance for these purposes. You can also still apply if you have already taken out a loan through BBLS and CBILS.

What are the benefits of the scheme?

With the economy reopening and applications open until the end of this year, the scheme is designed to help businesses adapt and recover rather than providing emergency credit to those adversely affected by lockdowns. For lenders, the Government-backed guarantee gives us security to support resilient businesses in economically viable sectors which we think will thrive in the post-COVID landscape.

What do you need to apply?

Decisions on whether a business is eligible for a RLS is delegated to the British Business Bank’s accredited lenders, so specific criteria may vary. At Conister, we require:

• Purpose of loan/assets
• Filed accounts
• Management accounts
• Bank statements

What type of finance is available?

Not every accredited lender can provide every type of finance available under RLS, and the amount of finance offered varies between lenders. Conister will provide the following types of facilities under the Recovery Loan Scheme:

• Asset Finance – from £25,000 to £500,000
• Term Loans – from £50,000 to £500,000

The interest rates for loans will vary and are dependent on the strength of your business and the sector in which you trade.

A full list of accredited lenders is on the British Business Bank website.

What’s the catch?

As long as your business is not in collective insolvency proceedings and is not in one of the few business sectors excluded from the RLS (banks, insurers or reinsurers; public-sector bodies; or state-funded primary or secondary schools) there are relatively few hurdles to overcome to access credit.