The new scheme will support borrowing of up to £10 million for individual businesses, and up to £30 million across a group, and can be used for business purposes including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford to take out additional finance, providing them with continued support as they steer a path towards a sustainable recovery.
Like CBILS – the Recovery Loan Scheme’s predecessor – borrowers can choose from term loans, overdrafts, asset finance and invoice finance, and we expect there will be a large number of participating lenders.
The complexity of the issues facing UK businesses as they seek to recover and grow means there is a real need for business finance experts who can understand what they require and find the right solution for them.
Although the Government is still providing a guarantee to the lender at 80% of the outstanding balance of the loan, the borrower remains 100% liable for the debt. There is also no interest free period and the client will need to pay any lender fees associated with the loan. Generally, these can be added to the amount being borrowed.
There is however no minimum or maximum turnover requirement to obtain a loan, although all applications will be fully credit-assessed. The RLS will be available through a network of accredited lenders.
Do I Qualify?
You will be able to apply for a recovery loan if you can demonstrate you meet the following criteria:
- Is a viable operation or would be viable were it not for the pandemic
- Has been impacted by the coronavirus pandemic
- Is not part of collective insolvency proceedings
Businesses that have already received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under the RLS, but only if they meet all other eligibility criteria. The outstanding balance of any CBILS or CLBILS will need to be taken into consideration when determining the amount of RLS finance.
In essence, the RLS is designed to improve the terms on offer to borrowers, but if a lender is in a position to offer the option of a loan on better terms than an RLS loan, they will do so. Businesses from any sector will be eligible to apply, except for banks, building societies, insurers and reinsurers (but not insurance brokers) public-sector bodies, or state-funded primary and secondary schools.
How does RLS compare to CBILS?
- There is no Business Interruption Payment from the Government, meaning you will have to pay any arrangement fees and interest due.
- The loan size has increased from £5million to £10million
- There is no turnover limit with RLS
- Borrower may have other facilities supported by BBLS or CBILS/CLBILS, and may not be required to refinance them
Remuneration and Commissions
We here at Goodman Corporate are proud to act in the spirit of the scheme and all fees and any commissions due will be declared on presentation of terms secured on your behalf. We do not charge any upfront fees or fees to make an application on your behalf.
How do I apply?
If you think you would benefit from a business recovery loan and would like to discuss making an application, please please get in touch here
or email us on enquiries@goodmancorporate.com