Recovery Loan Scheme

Post Author:

Anne Melville

Date Posted:

March 6, 2021

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Coronavirus

A new Recovery Loan Scheme to support businesses as they grow and recover from the Coronavirus pandemic was announced in the UK Government’s 2021 Budget.

Who is this for?

The Recovery Loan Scheme will enable businesses of any size, impacted by the pandemic, to access loans and other kinds of finance once the existing COVID-19 loan schemes close on 31 March 2021.

https://jsca.co.uk/bounce-bank-loans-update/

https://jsca.co.uk/sources-of-funding-for-businesses/

What funding will be available?

  • Term loans and overdrafts will be available for amounts between £25,001 and £10 million per business
  • Invoice finance and asset finance will be available for amounts between £1,000 and £10 million per business

The UK Government will guarantee 80% of the finance to the lender to give them confidence to lend to the business.

Once received, the finance can be used for any legitimate business purpose, including growth and investment.

Am I eligible?

You will be eligible if your business:

  • is trading in the UK
  • is viable or would be viable were it not for the pandemic
  • has been impacted by the coronavirus pandemic
  • is not in collective insolvency proceedings – further details will be provided in due course

If your business has already received support through the existing COVID-19 guaranteed loan schemes, it will still be eligible for this scheme as long it meets all the other eligibility criteria.

Businesses from all sectors can apply, but the following are not eligible:

  • banks, building societies, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools

How do I apply? 

The scheme launches on 6 April 2021 and is open until 31 December 2021, subject to review.

Loans will be available through a network of accredited lenders, whose names will be made public in due course.

 What are the borrowing terms?

  • Finance terms are up to 6 years for term loans and asset finance facilities
  • For overdrafts and invoice finance facilities, terms will be up to 3 years

What is the cost?

Loans must be repaid according to your individual lending agreement. Interest and other fees may apply.

Other information

No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence will not be accepted as security.

https://www.gov.uk/guidance/recovery

https://findbusinesssupport.gov.scot/service/funding/recovery-loan-scheme

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Glen Carrie on Unsplash

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