Covid-19 successor loan now up and running
The 2021 Budget announced a replacement of the Bounce-Back and other Covid loan schemes. It is called the Recovery Loan Scheme (RLS) and is now open to applications. It runs until December 2021, subject to review.
You apply through one of the banks listed here:
https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/for-businesses/
All the main banks are listed but not all of the challenger banks.
From the point of view of security, the government guarantees the lender 80% of the loan making it easy to access. No personal guarantees will be taken on facilities up to £250k and the borrower’s home cannot be taken as security when borrowing more than this.
When carrying out credit checks, lenders are allowed to ignore concerns about poor business performance caused by the pandemic.
Interest rates are at normal commercial levels and therefore will not necessarily be low. Interest and fees will be payable from the outset.
The Covid-19 loan scheme offers Term Loans, Overdrafts, Asset and Invoice Finance. The minimum is £1k for asset and invoice finance, £25k for term loans up to a maximum of £10m. There is no turnover restriction and it is open to any business trading in the UK. The business must be viable and impacted by the pandemic.
The Recovery Loan Scheme provides businesses with various financing options to support their recovery efforts. Companies can use term loans for longer-term investments, overdrafts for short-term cash flow management, and asset and invoice finance to leverage assets or unpaid invoices. This flexibility ensures that businesses can choose the most suitable type of financing for their specific needs and additionally, more flexibility.
Businesses must demonstrate that they were viable before the pandemic and continue to be viable but have been adversely impacted by COVID-19. This assessment helps ensure that the funds are allocated to businesses that have the potential for recovery and growth. The application process is streamlined to facilitate quick access to funds, therefore, providing timely support to businesses navigating post-pandemic challenges.