RLS 3.0 – What It Means

RLS 3.0 – Recovery Loan Scheme – What Does It Mean?

It is due, or should I say, was due to expire on 30th June.

The talk at the moment is that this will be extended in what is being branded RLS 3.0, be thankful for small mercies that at least it isn’t another new acronym.

The exact details of what the scheme will allow for remains to be determined, however I think it is worth sharing what we are already seeing from lenders as it may well help set expectations slightly better.

The Challenge To Lenders With RLS 3.0

The challenge to lenders as I see it is that showing a business is still impacted by Covid now is much harder than it was immediately post Covid, at some point there has to be a quasi statute of limitations. Proving the Covid impact was always a condition of the Government guarantee, however, it is now far more erroneous than it was before.

Talking to lenders we are seeing a change in criteria and outlook when it comes to RLS. The general thinking is that having reliance on the Government guarantee is less certain because it is more difficult, and dare I say, debatable as to whether a business is impacted by Covid or is just impacted by the other external factors in the world, goodness knows there are enough of them.

What Is Expected from RLS 3.0

What I am seeing is lenders looking at RLS 3.0 and deciding to go their own way, getting back to what they have always done and lending on their own product backed by their own credit assessment and risk. There seems to be a lower level of want to adopt the new RLS scheme, which may lead to businesses having misleading expectations which is something far more common than any of us would like.

I have no doubt businesses will look at the new RLS scheme as and when it it formally launched, then expect lenders to follow suit. I expect lenders to get accredited to lend under the new RLS scheme, I am less convinced there is a will from them to use the scheme and put it into practice and I do understand that.

A lender’s biggest risk is the one they don’t know about and I think that is where many of them will see the new RLS 3.0,

My aim is to share what I think will happen and that there may be better options for businesses than using RLS going forward.

Any questions then give me a bell and let’s see what happens.

By Dave Farmer

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