With the Coronavirus Business Interruption Loan Scheme and Bounce Back Loans now closed, eligible UK firms may apply for a new Recovery Loan Scheme.
Previous programmes saw over 1.6 million licensed institutions lend nearly £74 billion to companies to help them weather the coronavirus outbreak.
The new plan provides companies of any size with ongoing access to loans and other kinds of funding of up to £10 million per firm to help them recover and develop after the pandemic’s interruption.
The funds may be used for any legal company purpose, including expansion and investment, and will be backed by an 80 percent guarantee from the government to the lender, allowing them to continue lending to borrowers with confidence.
The new plan will go live on April 6, 2021, and will be open until December 31, 2021. Loans will be offered via a network of certified lenders, which can be found here on the British Business Bank website, along with information on how to apply.
In addition to loans ranging from £25,001 to £10 million, invoice and asset financing are available up to the same limit, but with a lower starting point of £1,000.
Loan terms and asset financing will be spread out over a maximum of six years, with overdraft and invoicing facilities spread out over a maximum of three years.
Participating banks will be urged not to accept personal guarantees or to secure financing on the borrower’s house.
At this point, the government’s qualifying conditions are easy, requiring that the company be:
- Trade in the United Kingdom.
- It would not be feasible if the pandemic affected by the pandemic was not subject to bankruptcy procedures.
- Businesses who have previously accessed prior COVID-19 guaranteed loan programmes will be eligible for credit under this plan provided the eligibility conditions are met.
Certain companies and organizations, such as banks, building societies, insurers and reinsurers (excluding brokers), public sector agencies, and state-funded primary and secondary schools, will not be eligible.