On the 3 March 2021 HM Treasury announced the introduction of a Recovery Loan Scheme. This is a new loan scheme which has been introduced to support access to finance for UK businesses as they grow and recover from the disruption caused by the COVID-19 pandemic.
As CBILS and Bounce Back Loans draw to a close, the Recovery Loan Scheme ensures that businesses of any size can continue to access loans and other forms of finance up to £10 million per business.
The Scheme will launch on 6 April 2021 and is open until 31 December 2021 (subject to review). Under the Scheme, all businesses trading in the UK that have been affected by the pandemic (and meet certain other viability and solvency conditions) can apply for loans or other types of finance of up to £10 million per business. The finance can be used for any legitimate business purpose (including growth and investment) and the government will guarantee 80% of the finance to the lender.
What type of finance is available?
The Scheme enables borrowers to choose from a variety of products, such as:
• Term loans and overdrafts, which will be available between £25,001 and £10 million per business.
• Invoice finance and asset finance, which will be available between £1,000 and £10 million per business.
Term loans and asset finance facilities will be available for up to six years while overdrafts and invoice finance products are available for up to three years.
No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
You will be able to apply for a loan if your business:
• is trading in the UK
You will need to show that your business:
• is viable or would be viable were it not for the pandemic
• has been impacted by the coronavirus pandemic
• is not in collective insolvency proceedings – further details will be provided in due course
Businesses that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under this scheme, if they meet all other eligibility criteria.
For further information or advice on how COVID-19 may be affecting your business please get in touch with a member of the Baines Wilson LLP, on 01524 548494 or 01228 552600.