Launched on 6th April 2021, the Recovery Loan Scheme 'RLS' is a new Government programme aimed at supporting UK businesses as they recover and grow following the COVID-19 pandemic.
The Ins & Outs
The new scheme will support borrowing of up to £10,000,000 for individual businesses (up to £30,000,000 across a Group) and can be used for any legitimate business purpose including managing cashflow, investment and growth.
A number of products will be available under RLS including term loans and overdrafts with a minimum facility of £1,000. Asset finance and invoice finance will also be available under the scheme albeit with a greater minimum facility of £25,001.
For term loans and asset finance, facilities are available for up to six years, with invoice finance and overdrafts available for up to three years.
It's important to note that whilst the RLS replaces the three previous emergency loan schemes (BBLS, CBILS & CLBILS), this is not 'CBILS 2.0' as there will be no interest free period - Borrowers are expected to meet all costs including interest payments and any lender fees associated with the facility.
Businesses that have already received support under the three schemes noted above, will still be eligible to access finance under the RLS, but the outstanding balance of those facilities will be taken into consideration when determining the amount of funding to be made available.
Prospective borrowers under the scheme will be subject to a full credit assessment and need to demonstrate their business:
can service the additional debt
is a viable operation or would be viable were it not for the COVID-19 pandemic
has been impacted by the COVID-19 pandemic
is not part of collective insolvency proceedings
There are no turnover restrictions for businesses looking to access the scheme and as with CBILS previously, PG's (personal guarantees) will not be required for facilities of £250,000 or less - Facilities above this will be at lender discretion as to whether PG's are required although these will be capped at a maximum 20% of the outstanding balance.
For further details . . .
If you're keen to further explore the new RLS and see how your business could benefit, get in touch with the team at KeySME today - We can talk you through the mechanics of the scheme and look at what options might be available to your business.
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