Businesses across the board are trying to restart and recover from COVID-19, but it is not simply a case of back to business as usual and many are in a difficult situation as a result of the pandemic.
As part of the Budget 2021, the Government has announced the Recovery Loan Scheme (RLS) designed to help businesses of all sizes get back on their feet.
What is the RLS?
So, what exactly is the RLS? This is a loan system that allows businesses of all sizes and in all industries the ability to borrow up to £10 million and is designed to replace the Coronavirus Business Interruption Loans Scheme (CBILS) and the Bounce Back Loans Scheme (BBLS). Businesses have access to a number of different finance products, including loans, overdrafts and invoice finance facilities.
Borrowing Terms
The RLS started on the 6th of April and is set to end on the 31st of December 2021 although this is subject to review. For term loans and overdrafts, businesses can borrow between £25,001 and £10 million while those borrowing for invoice finance and asset finance can borrow between £1,000 and £10 million per business.
Interest rates are capped at 15% and the terms of length are up to six years for term loans and asset finance facilities and three years for overdrafts and invoice finance facilities.
How Does it Differ From Previous Schemes?
There are similarities between the RLS and its predecessors, but there are also two key differences. These are that you’ll have to pay interest and fees from the very start of the loan and there is no turnover restriction under the RLS. Many accredit lenders have signed up and, as with previous schemes, the Government has given lenders an 80% guarantee to give lenders more confidence.
Am I Eligible?
Nearly all businesses operating in the UK are eligible for the RLS. You simply need to be able to show that the pandemic has impacted your business in a negative way, your business would be viable if it wasn’t for the pandemic and you are not in collective insolvency proceedings.
You can receive support even if you have received support through the other schemes although how much you borrow may be restricted based on how much you have borrowed previously. The scheme can be used for any legitimate business purposes, such as buying equipment, managing cash flow or for payroll.
Businesses are desperate to kick start their recovery and move on from COVID-19, but this is not easy for those that have been hit by the pandemic. The Government-backed RLS scheme can help organisations of all sizes to get the boost that they need to get their business up and running again and to aid their recovery moving forward.
