The UK Government has issued a variety of coronavirus support loans to help businesses through this trying time. Previous loans have focused on mitigating the impact of Covid-19 interruption through the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS); and the initial recovery through the Bounce Back Loan Scheme (BBLS). Those schemes have now closed to new applications.
The new Recovery Loan Scheme (RLS) is focused on the long-term recovery of businesses that have been affected by the pandemic, at all different sizes. This loan will support the next stage of your business recovery and growth. You can still apply for the RLS if you have taken out a CBILS or BBLS, and the scheme will be open to applications until 30th June 2022.
The RLS offers a government-backed guarantee to the lender of the business will still be liable for the debt, and lenders will seek to recover the outstanding balance from you before approaching the government. The government guarantee can support you to get a loan as lenders are required to pass on the benefits of the guarantee to customers. This means that lenders can offer the RLS if they would usually not be willing to lend or would only be willing to lend at a higher price without the guarantee.
Unlike previous loan schemes, the government will not provide Business Interruption Payments (BIPs) to cover interest payments, so you will need to be able to meet the costs of interest payments and fees from the outset. It is expected that the interest rates offered will take into account the existence of the government guarantee. Interest loans will vary and depend on the strength of your business and the sector in which you trade.
The RLS loan may be used to refinance a BBLS /CBILS, but it will require you to forfeit any remaining BIP entitlement you have. Borrower protections and scheme terms are different for the loans so it is worth speaking to your lender.
The RLS scheme is designed to support businesses that have been impacted by Covid-19 and are looking to recover, so lenders may be less likely to reject your application based on a business’s short-to-medium business performance during the pandemic. If you are not in insolvency proceedings and have a viable borrowing proposal then it may be worth considering how the RLS can help your business.
Conister will be offering the following types of facilities under the RLS:
● Asset Finance – from £25,000 – £1,250,000
● Term Loans – from £50,000 – £1,250,000
If you looking to find out more about the Recovery Loan scheme, visit:
