Chancellor Rishi Sunak will extend the Covid Recovery Loan Scheme for businesses for another six months, according to Bloomberg.
The Chancellor is expected to announce the six-month extension to the Recovery Loan Scheme in the Budget on October 27.
The scheme was launched in April as a bridge between the more generous Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme and regular bank lending. It was made clear at the time that the deadline would be the end of the year, subject to a review.
>See also: Recovery Loan Scheme 2021 full update – where do I apply for my loan?
It provides credit worth up to £10m and comes with an 80 per cent Government guarantee for lenders.
Its terms are less generous than previous emergency Covid-19 financial support though. Lenders are allowed to ask for personal guarantees from directors on loans over £250,000. Plus fees must be paid from the start and businesses must show that they would be viable were it not for being blindsided by the pandemic.
Because of these stricter financial terms, there has been less take up of the scheme. Many applicants have been denied a loan because their company’s turnover value wasn’t high enough, because of their credit rating or because they already had a Bounce Back Loan.
>See also: Failings revealed in Covid Recovery Loan Scheme
Although the Government did not expect the scheme to be as popular as its predecessors, it has been surprised by the lack of enthusiasm, according to The Times.
An industry source told the newspaper: “The take-up [of the scheme] was never really expected to be as big as the other schemes, but it also hasn’t been as big as they had expected.”
No figures on how much has been lent under the Recovery Loan Scheme have been published, despite the British Business Bank saying data would be made public this autumn.
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This schem is made only for large companies only, and not for small business as Government said with 80% Government guarantee infact refusal by bank is easy due to personal credit check on business owners which mean are fully responsible on getting the loan.
Its only a shadow and curtin to cover up why the Goverenment not helping business but in fact are getting disolved thank you for 80% recovery guaranteed loan that we can not receive up to £250000.
The Banks will not give the loans but they will to large companies with turn over £1 million but they will not say that in Public.
It is just a dirty game.
Absolutely shocking and fraudulent! Off course companies and individuals don’t have perfect credit ratings. Therefore these rules support big businesses and unfairly destroy small companies that would have survived and thrived were it not for the pandemic. WRONG WRONG DISHONEST
We were rejected out of hand by Lloyds Bank as they did not think our small business was sustainable. They then passed us over to their “partners” for credit. Since inundated with calls and emails from companies that have very dubious ratings when you look them up offering money over 6/12/18 months at interest rates of up to 99%. Reckon these are the sorts that would send the “boys” round if you got behind in your payments.
Truly disgraceful a national bank is referring to these types of lenders imo.
Let’s hope that this renewal will be more beneficial for small businesses as this scheme was not sensitive to small business needs, which were left without support in this crucial time of reopening and relaunching our businesses after long Covid closure.