Extension of the Recovery Loan Scheme
The original Recovery Loan Scheme launched in April 2021 to help businesses recover from the impacts of Covid-19. The original scheme was largely successful, helping nearly 19,000 businesses access an average of £202,000 in support.
While the original recovery loan scheme came to an end at the end of June 2022, a new iteration of the scheme was announced on the 20th July 2022. The new scheme will open on the 1st of August and will continue until 30th June 2024.
This new scheme has been welcomed by many businesses, still looking to recover from the effects of the pandemic.
Changes from the original scheme
The key changes in this scheme centre around the government guarantee to the lender. While the previous schemes offered the lender an 80% guarantee, the lenders lending on the new scheme will receive a 70% guarantee from the government. While a difference of 10% may not seem like much, this may result in lenders tightening up their lending criteria.
It’s important to remember that the government guarantee is in place for the lender, the business still remains liable to repay 100% of the loan amount. Lenders will typically exhaust their usual collection process before falling back on the government guarantee in the event of a default. As the lender may ask for a personal guarantee, this could leave business owner personally liable for the loan funds.
Additionally, while there’s no restriction on lending to businesses who have already received funds via the previous schemes (CBILS, BBLS, CLBILS, RLS), lenders will be lending under their normal commercial lending processes, meaning affordability, security and creditworthiness, among other factors will need to be taken into account.
More information on the scheme can be found here
Lenders on the Recovery Loan Scheme
At the time of writing, we’re still waiting on more lenders to be approved on the scheme. We still have a range of finance options for businesses to choose from including invoice finance, asset finance and many more.
To learn more about the recovery loan scheme and other types of funding we offer, you can get in touch here and one of the team will be in touch to help.