Businesses impacted by Covid-19 can now apply for corporate finance under the Recovery Loan Scheme, it has been confirmed.
It comes after the initiative launched on Tuesday, 06 April 2021, replacing the Bounce Back Loan (BBL) Scheme and Coronavirus Business Interruption Loan Scheme (CBILS).
Here’s what you need to know.
What is the Recovery Loan Scheme?
Replacing the existing coronavirus finance schemes, the Recovery Loan Scheme (RLS) is designed to support viable businesses as they enter into the recovery phase of the pandemic.
The guaranteed loan scheme can be used even if your business has already taken advantage of any other coronavirus loan schemes.
You can apply for a loan under the RLS until 31 December 2021.
Why should I use the RLS?
To incentivise borrowing, all RLS loans will include an 80 per cent government guarantee and an interest rate cap.
What can the loan be used for?
The cash can be used for any “legitimate business purpose”. This includes managing cash flow, investing in new plant and machinery, recruitment or growing your business in any other way.
It cannot, however, be used to refinance existing debt.
Do I need to guarantee the loan personally?
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 per cent of the outstanding balance of the RLS facility after the proceeds of business assets have been applied.
How much can I get?
Any single lender can provide up to £10 million as a term loan, overdraft, invoice finance, or asset finance.
For help and advice applying for a loan under the RLS, please get in touch with our expert corporate finance team today.