With most of the Government’s Covid financial support schemes now closed, the Recovery Loan Scheme (RLS) has been a last route to funding for many Cobid-impacted businesses.
The RLS was scheduled to end on 31 December 2021, putting a very final full stop on government-backed financial assistance for the business community. But in the Autumn Budget & Spending Review 2021, the Chancellor, Rishi Sunak, announced an extension of six months to the scheme.
From 1 January 2022 only small and medium sized businesses can apply, making it possible for these enterprises to apply for a recovery loan until 30 June 2022.
So, is your business eligible for this funding? And, how much could you borrow to fund the next stage of your recovery in 2022?
Who is eligible for the Recovery Loan Scheme?
The Recovery Loan Scheme (RLS) is aimed primarily at businesses which are viable in the market, but that are struggling to recover and grow due to Covid-19. Funding of up to £2million is available to eligible businesses that can meet the conditions for making an RLS claim.
Your business must:
- Have been negatively impacted by the Covid-19 pandemic
- Be trading in the UK
- Be a viable business proposition, going forward.
A chance to boost your working capital
If you meet the RLS criteria, this is an excellent opportunity to borrow money on very attractive terms and to bring additional working capital back into the business. Facilities are available as asset finance, invoice finance, overdrafts or term loans.
- The minimum loan and maximum term depends on the type of facility taken out:
- Asset Finance £1,000 / max 6 years
- Invoice Finance £1,000 / max 3 years
- Overdraft £25,001 / max 3 years
- Term Loan £25,001 / max 6 years
- The RLS is offered by a range of different approved lenders and each lender will determine the specific interest rates and applicable fees (taking into account the benefit of the government guarantee).
- The Government currently (from 1 January 2022) guarantees 70% of the loan. Personal guarantees (PGs) are not allowed for facilities below £250K. Above £250K, PGs can be required but can’t include your private residence and are capped at 30% of any shortfall after any business assets sold in event of default.
A decrease in the government-backed loan guarantee
Unfortunately, an additional change to the scheme announced in the Autumn Budget 2021, was the level of that government-backed guarantee dropping down from 80% to 70%. This 10% drop down to a 70% guarantee took place for loans advanced from 1 January 2022.
Talk to us about applying for a recovery loan
Lenders will want to see some form of business plan or projection before approving any facilities. We’re ideally placed to help you prepare financial projections and to provide the accounts, cashflow forecasts and background information that a lender will want to see.
Come and talk to us about the Recovery Loan Scheme and your financing requirements in general. We’ll support your applications and will help you to manage your funding needs.
Get in touch to discuss the Recovery Loan Scheme.