About the scheme
Launched on 6 April 2021, the Recovery Loan Scheme (RLS) provides financial support to businesses across the UK as they recover and grow following the coronavirus pandemic.
You can apply to the scheme if Covid-19 has affected your business. You can use the finance for any legitimate business purpose – including managing cashflow, investment and growth. However, you must be able to afford to take out additional debt finance for these purposes.
If your business has already borrowed from any of the other coronavirus loan schemes – namely:
• the Bounce Back Loan Scheme (BBLS)
• the Coronavirus Business Interruption Loan Scheme (CBILS)
• the Coronavirus Large Business Interruption Loan Scheme (CLBILS)
RLS is still open to you, although the amount you have borrowed under an existing scheme may in certain circumstances limit the amount you may borrow under RLS.
At Autumn Budget 2021, the government announced that the Recovery Loan Scheme will be extended by six months to 30 June 2022, with the following changes applying from 1 January 2022:
• The scheme will only be open to businesses with a turnover not exceeding £45m per annum
• The maximum amount of finance available will be £2 million per business (maximum amount per Group limited to £6m)
• The guarantee coverage that the government will provide to lenders will be reduced to 70%
Key features of the scheme
Up to £2m facility per business Guarantee to the lender to encourage lending Interest and fees to be paid by the business from the outset.
The maximum amount of a facility provided under the scheme is £2m per business (maximum £6m per group). Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. The scheme gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you remain 100% liable for the debt.
The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%.
Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
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.
The scheme will only be open to businesses with a turnover not exceeding £45m per annum.
Access to multiple 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 an existing scheme may in certain circumstances limit the amount they may borrow under RLS.
For further Information: https://www.british-business-bank.co.uk