Covid-19 successor loan now up and running

The 2021 Budget announced a replacement of the Bounce-Back and other Covid loan schemes. It is called the Recovery Loan Scheme (RLS) and is now open to applications. It runs until December 2021, subject to review.

You apply through one of the banks listed here:

https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/for-businesses/

All the main banks are listed but not all of the challenger banks.

From the point of view of security, the government guarantees the lender 80% of the loan making it easy to access. No personal guarantees will be taken on facilities up to £250k and the borrower’s home cannot be taken as security when borrowing more than this.

When carrying out credit checks, lenders are allowed to ignore concerns about poor business performance caused by the pandemic.

Interest rates are at normal commercial levels and therefore will not necessarily be low. They are capped at 15%. Interest and fees will be payable from the outset.

The scheme offers Term Loans, Overdrafts, Asset and Invoice Finance. The minimum is £1k for asset and invoice finance, £25k for term loans up to a maximum of £10m. There is no turnover restriction and it is open to any business trading in the UK. The business must be viable and impacted by the pandemic.

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