Launching on 6th April 2021, the Recovery Loan Scheme (RLS) is the long term replacement for the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS).
What is the Recovery Loan Scheme?
The loan scheme is set up to replace CBILS and BBLS, the aim is to continue support with lending to businesses that need (or want) it whilst at the same time winding down the level of financial support provided by the Government.
Similar schemes have existed previously with limited success, this time there is hope for more.
The scheme sees the Government provide the lender with a guarantee in the event of default up to 80% of the outstanding loan amount. At the same time, the borrower remains liable for the full amount of the borrowing as is always standard.
One key point of difference is that all lending will be subject to assessment by whichever lender, lending under RLS will need to be shown to be affordable after factoring in any other finance that exists, including interruption loans or bounce back loans.
For easier clarity, lets see how the new loan scheme differs from CBILS:
|Feature||CBILS||Recovery Loan Scheme|
|Loan Amount||£50k upwards||£1k upwards|
|Loan Term||Up to 6 years||Up to 6 years|
|Government pays first year costs||Yes||No|
|No personal guarantee on loans up to £250k||No PG required||No PG required|
|Trading start date||Pre November 2019||None|
|Dates||Ends 31st March 2021||Starts 6th April 2021|
Applying For Recovery Loan Scheme
The lenders who have provided CBILS loans are expected to also provide lending under the new scheme. We expect to see the RLS used for business loans as well as other business funding options including:
- Commercial Mortgages
- Asset Finance
- Invoice Finance
- Property Lending
Don’t think that just because the scheme is called ‘Recovery Loan Scheme’ that it is just about loans, it isn’t. We expect to see the scheme cover all the above which includes commercial mortgages for owner occupier property, asset finance and invoice finance.
What will I need to apply?
Every lender is set to be different and want something slightly different. Exactly what you will need to provide remains more than a single simple answer, however, there will always be a level of information you will need to have.
If you are thinking of applying for an RLS then it may be worth getting together;
- Your most recent full set of financial accounts (the set that includes a P&L)
- Any year to date P&L and Balance Sheet
- Your last 12 months business bank statements (easy to download)
- Some figures for your business looking forward, a forecast P&L and Cashflow are always handy
These are the basics and can be put together now to save time later.
If you want details of how to apply as soon as the scheme is launched then add your details below and we will send everything to you as soon as we have it.