Recovery Loan Scheme launches
The Government-backed Recovery Loan Scheme (RLS) launched on 6th April and runs until 31st December this year.
Whilst, not a direct replacement for the CBILS & Bounce Back Loan schemes, the RLS is designed to support businesses of all sizes with their recovery and growth as we emerge from the ravaging effects of the pandemic.
Again offered through a number of Accredited Lenders (banks and others) approved via the British Business Bank, the RLS will offer funding from as low as £1000 up to £10m. Facilities covered will include asset and invoice finance as well as term loans and overdrafts. Loans can be agreed up to a term of 6 years.
As with previous schemes, the Lender will benefit from an 80% government-backed guarantee against the outstanding amount of a facility, with the borrowing business liable to repay 100% of the facility.
Lenders will not be able to take a personal guarantee from directors/shareholders for facilities less than £250,000 but a guarantee may be required for facilities above this amount.
Unlike CBILS/BBLS though, there is no interest-free period and any lender arrangement fees will also be payable by the borrower.
Most types of businesses operating in most sectors can access the scheme (subject to meeting the eligibility criteria) and loans can be used for any legitimate business purpose.
All lending decisions will be at the discretion of the lender and businesses are likely to have to provide a range of information including annual and management accounts, business plans etc to enable their lender to assess creditworthiness and ability to repay.
Existing CBILS and BBLS do not need to be repaid but lenders will take any repayment amounts associated with them into their overall affordability calculations.
The devil is in the detail of course and businesses should speak to their advisors/finance brokers for assistance in assessing their options and navigating their way through the scheme.
Jeff Durant
Otium Partners Ltd
Email: jeff.durant@otiumpartners.com
Tel: 07872 601662