The Recovery Loan Scheme will provide government-backed loans to firms impacted by COVID-19 until June 30, 2022.
The initiative, which was initially designed to give government-backed loans to companies severely afflicted by the Covid-19 outbreak, will also include additional application requirements beginning January 1st, 2022.
The Recovery Loan Scheme initially offered government-backed loans ranging from £25,000 to £10 million, with interest rates set at 14.99 percent.
The Chancellor indicated in his Autumn Budget 2021 address that this loan initiative would only give a maximum of £2m per company for applications beginning January 1, 2022. Meanwhile, the UK government will guarantee 70% of all cash granted to lenders, rather than the prior guarantee of 80%.
Furthermore, from January 1, 2022, the plan would be limited to small and medium-sized firms (SMEs).
The British Business Bank recently announced that the Recovery Loan Scheme has reached an important milestone since its inception in April. Over £1 billion in Recovery Loans have been offered to small companies throughout the country by 76 lenders licensed to provide them.
“Finance is the key to unlocking these development ambitions,” said Lisa Jacobs, UK managing director of Funding Circle, an approved lender for Recovery Loans, “and we look forward to continuing to support companies throughout the programme, create employment, and drive the economic recovery.”
From January 2022, what may you borrow under the Recovery Loan Scheme?
Each firm may apply for term loans or overdrafts ranging from £25,001 to £2 million. Furthermore, SMEs may apply for invoice or asset loans valued between £1,000 and £2 million per company.
Overdrafts and invoice financing will be available for a maximum of three years. Meanwhile, credit and asset financing will be accessible for a period of up to six years.
Qualification for the Recovery Loan Scheme
To be eligible for the Recovery Loan Scheme, your small company must still be operating in the United Kingdom. You must also be able to show your company’s pre-pandemic viability and the financial consequences of the Covid-19 problem.
Your company must also be free of collective insolvency procedures, albeit small businesses subject to the Northern Ireland Protocol may face different eligibility restrictions.
Small companies looking for a Recovery Loan may locate a list of certified lenders on the British Business Bank website. Using its criteria, you can easily locate lenders in your area that can supply the sort of financing you need.
“Businesses up and down the nation are starting to look beyond the epidemic to the potential open to them in the recovery,” said Catherine Lewis La Torre, CEO of British Business Bank.
“The British Business Bank is dedicated to assisting smaller companies in obtaining the capital they need to expand responsibly in the future.”