British Business Bank introduced the Recovery Loan Scheme on April 6th, 2021 (valid till December 31st, 2021), as a new debt finance scheme to replace the existing ones, including Coronavirus Large Business Interruption Loan Scheme – CLBILS, Coronavirus Business Interruption Loan Scheme – CBILS, and Bounce Bank Loan Scheme – BBLS. These schemes were introduced by the UK government in order to keep the businesses floating that were affected by the COVID-19. Apart from COVID-19 purposes, the Recovery Loan scheme can be opted by business persons for other reasons also, mainly including access to finance to save their business from additional losses.
“The Recovery Loan Scheme will be valid until December 31, 2021.”
“The Loan Scheme can offer £1000 to £10 million worth of lean to a business.”
Recovery loan schemes works by finding a lender on a British Business Bank website and finalizing the right deal with the lender. The lender may demand a personal guarantee, management accounts, business plan, historical accounts, and details of assets to prove that a borrower will be in a state to repay the amount! The working strategy of this scheme resonates between lenders, which the British Business Bank accredits, and probably you if your business is being affected by the COVID-19. You can easily approach the lenders through the British Business Bank website, where many lenders are officially registered. The opportunities provided by any lender are:
- Term Loan – lasts for six years
- Overdraft – lasts for three years
- Invoice Finance – lasts for three years
- Asset Finance – lasts for six years
“RLS has no turnover limit.”
You are eligible to avail RLS in the following circumstances:
- The Recovery Loan Scheme applies to businesses that are currently running in the UK.
- You need to prove that your business is affected by the pandemic.
- Banks, insurers, public sector, and state-funded primary and secondary schools cannot apply for Recovery Loan Scheme.
Despite all the information mentioned above, the lenders will be facing some difficulties to recover unpaid recovery loans as quoted in the Mail on Sunday recently:
“HSBC, NatWest, Barclays, and Lloyds have begun writing to businesses warning them that repayments on emergency support loans will soon be expected. Banks have handed out more than £75bn to 1.6m firms under several schemes set up by Rishi Sunak, the Chancellor, and are expected to spend millions on recovery. However, one senior banker warned that lenders could go in hard to recover debts after a recent court case found banks do not have a duty of care to borrowers who fail to repay.”
Bounce Back Loan Scheme (BBLS). (n.d.). Retrieved from British Business Bank: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/
Coronavirus (COVID-19): Recovery Loan Scheme. (2021, March 3). Retrieved from Gov.UK: https://www.gov.uk/guidance/recovery-loan-scheme
Coronavirus Large Business Interruption Loan Scheme (CLBILS). (n.d.). Retrieved from British Business Bank: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/clbils/
Recovery Loan Scheme for businesses. (n.d.). Retrieved from British Business Bank: https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/for-businesses/