The British Business Bank has announced that the Recovery Loan Scheme has passed a significant milestone, with 76 accredited lenders having offered over £1billion to smaller UK businesses as they steer a path towards a sustainable recovery.
Of the £1.06billion of funding offered through 6,190 facilities so far, £822.8million has been drawn down through 5,137 facilities.
The Recovery Loans Scheme launched in April 2021 and is currently scheduled to run until 31 December 2021. The scheme supports borrowing of up to £10million for individual businesses and up to £30million across a group, with funds available for any legitimate business purpose, including managing cashflow, growth and investment. It is designed to appeal to businesses that can afford to take out additional finance for these purposes.
Catherine Lewis La Torre, CEO, British Business Bank, said, “Businesses up and down the country are beginning to look beyond the pandemic towards the opportunities available to them in the recovery. The British Business Bank is committed to supporting smaller businesses in accessing the finance they need to grow sustainably in the future. In meeting the £1billion milestone, the Recovery Loan Scheme is demonstrating its impact by helping thousands of companies to fund their further development.”
Scheme features include:
- Up to £10million facility per business: The maximum amount of a facility provided under the scheme is £10million per business (maximum £30million per group). Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
- Wide range of products: Businesses can choose from term loans, overdrafts, asset finance and invoice finance (subject to the lender being accredited for each of these finance types).
- Term length: Term loans and asset finance facilities are available from three months up to six years, with overdrafts and invoice finance available from three months up to three years.
- Interest and fees to be paid by the business from the outset: Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
- Access to multiple schemes: Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme, although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS.
- Pricing: The annual effective rate of interest and upfront and other fees cannot be more than 14.99%.
- Personal Guarantees: Personal guarantees are not permitted for facilities of £250,000 or less. Above £250,000 the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied. No personal guarantees can be held over Principal Private Residences.
- Recovery Loan Scheme-backed facilities are provided at the discretion of the lender.
- Guarantee to the lender: The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility.
The borrower always remains 100% liable for the debt.
Eligibility criteria include:
- Covid-19 impact: The borrower must confirm to the lender that it has been impacted by Covid-19.
- UK-based: The borrower must be carrying out trading activity in the UK.
- Viability test: The lender will consider that the borrower has a viable business proposition but may disregard any concerns over its short-to-medium term business performance due to the uncertainty and impact of Covid-19.
- Credit and fraud checks for all applicants: Lenders are required to undertake credit and fraud checks for all applicants, as well as customary checks such as Know Your Customer and Anti-Money Laundering. The checks and approach may vary between lenders.
- Turnover limit: There is no turnover restriction for businesses accessing the scheme.
Data as provided to British Business Bank by Recovery Loan Scheme delivery partners at 18 October 2021. A breakdown of data by region and sector will be provided in future releases.