On 6th April 2021 the UK Government launched the Recovery Loan Scheme (RLS), relating to government backed, coronavirus funding to businesses. It replaces the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan (BBL) schemes that ended on 31st March 2021.
The RLS is due to run until 31st December 2021.
It has similar features to the previous Government backed schemes albeit the level of borrowing available could be restricted if a business has previously taken out funding using the CBILS, CLBILS or BBL schemes.
The RLS is administered by the British Business Bank, working with accredited lenders, of which there are currently 23, including Barclays, Aldermore, Arbuthnot, HSBC, Natwest, and many more.
The key features of RLS are:
- Businesses can obtain a facility up to £10m, via either term loan, overdraft, invoice finance or asset finance funding;
- Term loans and asset finance can be up to a 6-year term;
- Overdrafts and invoice finance can be up to a 3-year term;
- The borrower remains 100% liable for the debt;
- Lenders are prohibited from requesting personal guarantees on loans under £250k;
- For loans over £250k, personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied;
- A Principal Private Residence cannot be taken as security to support a personal guarantee or as security for a RLS backed facility; and
- There are no interest or capital repayment holidays, unlike those available under the previous schemes.
A business is eligible for a RLS loan if:
- It has been impacted by Covid-19 – the borrower must confirm to the lender that it has been impacted by the coronavirus pandemic;
- It is carrying out trading activity in the UK; and
- There is a viable business proposition – the lender may disregard (at its discretion) any concerns over short-term to medium-term business performance due to the uncertainty and impact of Covid-19.
In order to apply for a RLS loan, a lender is likely to require up to date management accounts, a business plan, historical financial accounts and details of balance sheet assets. Decision-making on whether a business is eligible for the RLS is fully delegated to the British Business Bank’s accredited RLS lenders.
RGCF has significant experience of the funding world and how to successfully raise funding, in good times and bad. If you would like to discuss this further, please contact:
Nick Johnson CF Partner
nickjohnson@ryecroftglenton.com 07494 076 953
Alex Simpson CF Senior Manager
alexsimpson@ryecroftglenton.com 07718 043 858