Joshua Leigh & Co

Businesses can still access the Recovery Loan Scheme

Businesses affected by the Coronavirus pandemic and its related economic impact can still access the Recovery Loan Scheme (RLS).

Launched in April, the new scheme follows on from the closure of applications for other Government loan schemes, including the Coronavirus Business Interruption Loan Scheme (CBILS).

Finance worth up to £10 million, backed by a Government guarantee is available in the form of:

• Term loans
• Overdrafts
• Invoice finance
• Asset finance

The finance facilities and loans available under the scheme range from three months up to six years, while overdrafts and invoice finance are available up to three years. The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99 per cent.

The scheme provides lenders with a Government-backed guarantee against the outstanding balance of the facility.

However, the borrower always remains 100 per cent liable for the debt and must meet the costs of interest payments and any fees.

Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.

Personal guarantees are not required for loans of less than £250,000 but can be for loans above this level at the lender’s discretion, although not over Principal Private Residences.

Unlike the previous COVID loan schemes, the RLS does not provide a 12-month ‘Business Interruption Payment’ from the Government.

Interest payments and capital repayments will commonly start a month after taking out a facility. However, it can vary from one accredited lender to another.

Crucially, businesses that have already accessed CBILS, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bounce Back Loan Scheme (BBLS) can still access the RLS, although, amounts borrowed under previous schemes could affect the amount they can borrow under the new scheme.

The RLS will close on 31 December 2021.

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