Rishi Sunak has announced the Recovery Loan Scheme to take the place of the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme.
UK businesses of any size can apply for a loan or overdraft between £25,000 and £10m until the end of 2021. Asset and invoice finance between £1,000 and £10m will also be available. All will have a Government guarantee of 80 per cent.
Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance, terms will be up to three years.
No personal guarantees will be taken on facilities up to £250,000 and, as before, a borrower’s principal private residence cannot be taken as security.
The Recovery Loan Scheme opens April 6 and will run until December 31, subject to review. Like CBILS and the Bounce Back Loans, these will be available through a network of accredited lenders, whose names will be made public in the near future. Details on how to apply will be revealed in the coming weeks.
Once you receive it, the finance can be used for any legitimate business purpose, including growth and investment.
Sunak said: “Even with the new Restart Grants, some businesses will also need loans to see them through. As the Bounce Back Loans and Business Interruption Loan schemes come to an end, we’re introducing a new Recovery Loans Scheme to take their place.”
Can I apply for the Recovery Loan Scheme?
If your business is based in the UK then you can apply, but it must:
- Be viable or would be viable were it not for the pandemic
- Have been impacted by the coronavirus pandemic
- Not be in collective insolvency proceedings – further details will be provided in due course
Banks, building societies, insurers and reinsurers (but not insurance brokers); public-sector bodies; and
state-funded primary and secondary schools are not eligible to apply.
Can I apply for the Recovery Loan Scheme if I’ve had CBILS or Bounce Back Loan support?
Yes you can, as long as you meet all of the other eligibility criteria.
What about the current Covid-19 Government loan schemes?
The CBILS and bounce back loan schemes will end on March 31 2021 as previously planned. They were introduced last year to help struggling businesses through difficulties in the earlier stages of the pandemic.
Small Business has teamed up with FundingOptions.com to help you find the right finance for your business. You can find their page here.
In response to the Budget announcement, Andrew Sanford, partner at Blick Rothenberg said: “Allowing businesses to apply for the new Recovery Loan Scheme to the end of 2021 is welcome news. However businesses are crying out for long-term funding support.”
Lenders have previously expressed worries about delays in establishing details of the scheme and their ability to prepare themselves for the launch of the loan scheme.
The Government has also pledged extra grants for the self-employed, a three-month business rates holiday extension and an extension of the furlough scheme until the end of September.