What is The Recovery Loan Scheme?
The COVID 19 pandemic has resulted in overwhelming economic disruption to businesses across the globe, with many UK businesses struggling to recover from the long-term effects of lockdowns across the country. Thankfully, if this applies to you, there is new hope through the Recovery Loan Scheme.
On 6th April 2020, The Recovery Loan Scheme (RLS) was launched with the goal of helping UK businesses to recover from the detrimental financial impact of the pandemic. The loan is available to businesses of every size, and there is no turnover restriction, so provided you have been affected by COVID 19, you may qualify for the scheme.
Whilst this money is not available directly from the government, loans are provided with a government backed guarantee against 80% of the finance to the lender, to encourage more confidence in lending. As the borrower, however, you are liable for 100% of the debt. Interest rates are determined by the individual lender, however, the combined effective annual rate of interest, upfront fees, and any other associated fees cannot exceed 14.99%.
Applications to the scheme will be accepted until June 2022, subject to review. The scheme is available solely through British Business Bank PLC accredited lenders, a list of whom is listed on the British Business Bank website.
Your business may be able to borrow between £25,001 and £10 million for any legitimate business purpose; including managing cash flow, asset acquisition or business expansion, as per the breakdown below.
Up to 3 months
Invoice finance of between £1,000 and £10 million per business
Overdrafts of between £25,001 and £10 million per business
Up to 6 years
Asset finance of between £1,000 and £10 million per business
Term Loan of between £25,001 and £10 million per business
*Loans up to £250,000, should be offered on terms without requiring personal guarantee and a maximum personal guarantee of 20% can be required for loan terms of above £250,000.
There are a number of criteria that your business must meet in order to be eligible for the Recovery Loan Scheme, which include:
If you’ve received short to medium-term support under any previous government finance schemes throughout the pandemic, you’ll still be able to apply under the RLS scheme, however, in some cases your borrowing may be restricted. This includes the following schemes:
Here at Union Finance, we would be happy to help you with your application for financing under the Recovery Loan Scheme, whilst making sure that you’re fully aware of the associated lending terms.
On application you will need to provide the lender with a full business proposition, including details on how you were affected by the pandemic and what the purpose of the loan is. The lender will also need to be satisfied that your business can afford to repay the loan. Proof of affordability will vary based on lender criteria, however, is likely to include:
The decision on whether your business is eligible is at the discretion of the RLS lender, who must be accredited by the British Business Bank. Credit and fraud checks will also be carried out on application.
To see if your business is eligible for the RLS scheme, or for further advice and clarification on the subject, contact our friendly team today by clicking here.