The successor to CBILS and BBLS (and probably EFG also) remains on track to launch on 1st April, traditionally not a good day for anything to be taken too seriously, however there are some serious facts emerging.
So what do we know so far?
The Good News
The various loan schemes on offer will merge into one new offering, being RLS. Previous schemes have had defined criteria around the size of the business applying, along with different amounts of borrowing available depending on that size of the business. RLS will be one offering for businesses of all sizes and life stages.
Amounts will range from £1,000 all the way up to term loans of £10m. Loan terms will be up to 6 years.
Finally, this bit is good, there are no personal guarantees on loans of up to £250k, and interest rates are capped at 15%.
The general feeling is that lessons have been learned from CBILS and BBLS.
As with any good news, there is always a balance on the other side.
The Less Good News
The Government guarantee will be 80%, this is in line with what we see on the Coronavirus Business Interruption Loan Scheme (CBILS) but falls short of the 100% guarantee offered on the Bounce Back Loan Scheme (BBLS).
There will also be an affordability assessment with all borrowing subject to affordability checks. Where this may be an issue is with companies who have CBILS finance, meaning those repayments will need to be accounted for in any Recovery Loan Scheme assessment.
Which Lenders Are Going To Offer RLS?
At the moment all lenders who are accredited for CBILS should also be accredited for RLS, should they wish to be. The British Business Bank has advised they will accelerate accreditation for those lenders already authorised for CBILS. It would also seem sensible that given the interest in the scheme that most CBILS lenders will take up the RLS option.
All things considered it looks encouraging. The affordability part is going to be interesting as the most recent financials of most applicants will be impacted by Covid, this means traditional underwriting methods may fall short of what is needed. Let’s wait and see.
Whatever happens, we will be at the forefront and in a position to help with RLS applications.
If you want details of how to apply then add your details below and we will get this to you as soon as it is available.
By Dave Farmer