Last Chance To Claim The Recovery Loan Scheme

Tuesday 5 October 2021

Written by Lee Manning

Last Chance To Claim The Recovery Loan Scheme

Last Chance To Claim The Recovery Loan Scheme

I think this has most probably been the longest 18 months in my career, I have discovered new words and acronyms like furlough, CBILS & CJRS. Who would have thought that you could obtain a loan from your bank up to £50,000 by completing a one-page form and receive the money virtually the next day? We will be telling our kids for years to come and they won’t believe us!

So where are we with all the loan schemes that are currently available, as I think now is going to be the most important time when it comes to monitoring your cashflow now that HMRC are looking to get paid after offering deferment schemes, and now business has picked up that there are no issues with overtrading.

The Recovery Loan Scheme is a new government loan scheme that will replace the now-closed Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS). Recovery Loans Scheme (RLS) allows qualifying businesses to borrow up to £10 million – either as term loans, overdrafts, invoice finance or asset finance. It is available until the end of the year and can be taken out even if you have had a Bounce Back or CBILS loan. A key aim of the Recovery Loan Scheme is to improve the terms on offer to you, but if a lender can offer you the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so. Also, if you borrow less than £250,000 a personal guarantee is not required, which is good news. The terms can be from as short as 3 months to a maximum of 6 years.

Your company is no doubt eager to begin increasing its post-Covid operations. But as initial trading opens, your expenses are likely to precede revenues and working capital requirements will be tighter. This is likely to leave you in a tight cash position and in need of extra funds to kickstart your recovery and longterm prosperity. The new RLS is a useful route to finance.

To be eligible a business must meet certain eligibility criteria including:

  • Be able to self-certify that it has been impacted by Covid-19;
  • Be UK-based in its business activity and generate more than 50% of its turnover from trading activity (registered charities and further education establishments are exempt from this requirement);
  • Be engaged in trading activity in the UK at the time it draws down the facility;
  • Have a borrowing proposal that would be considered viable by the lender. In making their assessment, lenders may, but are not required to, disregard any concerns over a business’s short-to-medium term business performance due to the uncertainty and impact of Covid-19

This scheme is available to start-ups but at the discretion of the lender and subject to meeting the Scheme eligibility criteria. For early-stage businesses in their first two years of trading, the British Business Bank’s Start-Up Loans programme (loans from £500 to £25,000 at an interest of 6% per annum) may be more suitable.

You may need to provide certain documents when you apply for an RLS backed facility. These requirements vary from lender to lender, but are likely to include:

  • Management accounts
  • Business plan
  • Historic accounts
  • Details of business assets

If you do not have everything listed here, an RLS facility could still be an option to provide finance to support your business. To find out more about the RLS, check out this super helpful guide from our fiance partners - Capitalise. 

The Benefits Of The RLS

If you think you need financial support then I would approach your existing bank or, if you are an existing client of Raffingers then get in touch with your relationship partner as our partnership with Capitalise means we offer a straightforward, streamlined application process via a wide-ranging network of Capitalise banking and lending partners. 

If you need any help with the application or looking for a lender please get in contact with me.

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