We now have some solid information regarding the Recovery Loan Scheme (RLS) which is set to run until 31st December 2021.
If you have been refused by your high street bank, and are happy to pay a bit more, please get in touch. firstname.lastname@example.org
Key features of the scheme include:
– Facilities starting from £1,000 for invoice finance and asset finance, and £25,001 for term loans and overdrafts. The maximum is £10 million per business.
– Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.
– The level of maximum funding will be based on 25% of 2019 turnover, twice the company’s annual wage bill, or the loan is proportional to the business’ next 12/18 months liquidity requirements.
– No Personal Guarantees can be taken on facilities up to £250,000, and borrower’s principal private residence cannot be taken as security.
– No interest free period – businesses are required to meet the cost of interest payments and any fees associated with the facility.
– Businesses which have taken out a CBILS, CLBILS or BBLS facility can still access the new scheme, although the maximum they can borrow depends on the lender’s assessment and scheme requirements.
– Lenders will be required to undertake standard credit, fraud, AML and KYC checks for all applicants. When making their assessment, lenders may overlook concerns over short-term to medium-term performance owing to the pandemic. The checks and approach will vary between lenders.
– A business has to be viable to lend to – they cannot be, at the time of application, subject to relevant insolvency proceedings.
A key aim of the RLS is to improve the terms on offer to borrowers, but if a lender can offer a borrower the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so. Of course, this may require a personal guarantee as per normal lending.
Like CBILS, the British Business Bank set out guidelines which have to be met by the borrower to access the scheme. However, each application will be assessed at the discretion of the lender and within their internal criteria. This means that lender appetite will be key to the success of each application.
At this moment in time, there are only a handful of accredited lenders that have access to the scheme. Unsurprisingly, these are mainly the High Street Banks plus a few others. We are hoping in a matter of a few weeks, the remaining lenders will receive their accreditation, giving us much more scope and choice.
It is, as in all cases, advisable that you speak to your bank in the first instance as this will be where the most cost effective funds are available. If you get no success, then please feel free to contact us for assistance.
Our thanks to Martin Munro and Sharon Cook for the Info.