Recovery Loan Scheme Extended
The Recovery Loan Scheme (RLS), launched on 6 April 2021 and supports access to finance for UK businesses as they recover and grow following the Covid-19 pandemic, has been extended by six months to 30 June 2022.
RLS aims to help businesses affected by Covid-19 and can be used for business purposes, including, managing cashflow, investment and growth. It is designed to support businesses that can afford to take out additional finance for these purposes. Businesses who have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme.
A key aim of the Recovery Loan Scheme is to improve the terms on offer to businesses, but if a lender can offer a business the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.
Here at DropJaw we can assist scale-up companies to access RLS and other funding instruments such as equity fundraising, asset finance, access to grants, invoice discounting and many others.
The maximum amount of lending through the Recovery Loan Scheme is £250,000. The minimum facility size £25,001 with repayment terms of up to five years.
Interest and fees to be paid by the borrower from the outset: Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
Access to multiple Covid-19 schemes: Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS.
Personal Guarantees: Personal guarantees are not permitted for facilities of £250,000 or less. Above £250,000 the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied. No personal guarantees can be held over Principal Private Residences.
Guarantee to the Lender: The scheme provides the lender with a Government-backed guarantee against the outstanding balance of the facility. The borrower always remains 100% liable for the debt.
Covid-19 impact: The borrower must confirm to the lender that it has been impacted by Covid-19.
UK-based: The borrower must be carrying out trading activity in the UK.
Viability test: The lender will consider that the borrower has a viable business proposition but may disregard any concerns over its short-to-medium term business performance due to the uncertainty and impact of Covid-19.
Credit and fraud checks for all applicants: Lenders will be required to undertake credit and fraud checks for all applicants. The checks and approach may vary between lenders.
Turnover limit: There is no turnover restriction for businesses accessing the scheme.
For more information and to kick off an informal funding, restructuring and or growth discussion please email firstname.lastname@example.orgOther news