In a surprise announcement, the Government has extended the Recovery Loan Scheme for two years from August 2022.
We say a surprise: the real surprise is that an extension wasn't announced before the end of June when the original scheme expired, although it might be said that Government has been somewhat preoccupied of late!
The main features of the extended Recovery Loan Scheme remain unchanged: the Government will provide a guarantee of 70% of the loan to the lender and the maximum loan size remains at £2m.
However, as we predicted in May, lenders may now request a personal guarantee from the borrower, in line with standard commercial practice.
In a press release, Business Secretary Kwasi Kwarteng said:
“The extension of the Recovery Loan Scheme will help ensure we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK.”
Shevaun Haviland, Director General of the British Chambers of Commerce, said:
“After two years of pandemic disruption and with a faltering global economy, the BCC has been calling for this continued financial support for firms. The two-year extension to the Recovery Loan Scheme will be a lifeline for many businesses facing a rising tide of costs.”
We expect the list of accredited providers to remain broadly unchanged, which provides a good range of product alternatives, including commercial loans, invoice finance and asset finance.
If you would like to assess your business's suitability for the scheme, please get in touch for a confidential and no obligation chat.
**UPDATE** 2 August 2022. Confirmation is out today from the British Business Bank that a principal private residence cannot be taken as supporting security by a lender for a personal guarantee. Also that, unlike previous iterations of the scheme, businesses will not have to confirm that they have been negatively impacted by Covid to qualify. Finally, businesses that took out a CBILS, Bounceback loan or RLS before 30 June 2022 can still apply for further RLS support if needed.