Applications open for Business Recovery Loan Scheme
The Business Recovery Loan Scheme, announced in the Chancellor’s Budget on 3 March, opened for applications on 6 April 2021.
What is the Business Recovery Loan Scheme?
The scheme is government-backed and is the successor to the BBLS, CBILS/CLBILS. It is available to businesses who are adversely affected by the pandemic and is provided by a number of different lenders via a variety of facilities, including termed loans, overdrafts, invoice finance and asset finance.
Which businesses are eligible to apply?
All UK businesses, of any size that are currently trading and financially affected by the pandemic and can show that their business:
- Would be viable were it not for the pandemic
- Has been adversely impacted by the pandemic
- Is not in collective insolvency proceedings (unless within the scope of the Northern Ireland Protocol).
Which businesses cannot apply?
- Banks, building societies, insurers, and reinsurers (not including insurance brokers)
- Public sector bodies
- State-funded primary and secondary schools
What are the key features of the scheme?
- Up to £10m facility per business or a maximum of £30m per Group
- Varying minimum loan amounts ranging between £1,000 and £25,001 depending on the type of facility
- Government guarantees to lenders of 80% (lenders will always be liable for 100% of the loan debt)
- Interest and fees to be paid by the business from the outset, with the effective rate of interest including fees to be no more than 14.99%
- Term lengths of between three months and six years (for term loans and asset finance) and 3 months and 3 years (for overdrafts and invoice finance)
- Personal guarantees not required for facilities below £250,000. Any facility exceeding that amount is capped at a maximum of 20% of the outstanding balance of facility. Personal guarantees cannot be held over Principal Private Residences.
- No turnover restrictions for businesses accessing the scheme
- Businesses that have accessed previous COVID-19 guaranteed schemes will still be eligible for finance under this scheme if they meet the eligibility criteria.
For what purpose can businesses use the finance?
Loans can be used for any legitimate business purpose, including management of cashflow, investment and growth.
How do businesses apply for a Business Recovery Loan?
There are currently over 20 accredited lenders – details can be found here https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/current-accredited-lenders/
Borrowers should apply directly to the lender.
What documents must businesses provide?
Requirements will vary from lender to lender but are likely to include, as a minimum, management accounts, business plan, historic accounts, and details of assets.
Lenders, at their discretion, may overlook concerns over short-term to medium-term performance owing to the pandemic. The checks and approach will vary between lenders.
When does the RLS end?
Applications will close on 31 December 2021 although this is subject to review.
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The information was correct at time of publishing but may now be out of date.