Recovery Loan Scheme
Where CBILS was designed to help business that had in some way been affected by the pandemic, the RLS is more focused on helping them recover.
The RLS is geared towards helping business that were affected by the restrictions imposed due to the pandemic, but have a clear chance of long-term survival with adequate finance in place.
Can you have RLS if you already have CBILS borrowing?
Yes, you can combine RLS with CBILS with both facilities being separate i.e. you don’t have to settle your CBILS loan with your RLS facility.
What companies are eligible?
There are no turnover restrictions with RLS. You will need to self-certify that the business has been affected by the pandemic e.g. lost revenue, impacted cash flow etc.
The focus is now on supporting viable growth and this can be interpreted widely enough to allow most business to apply.
What facilities are available?
RLS covers loans, overdrafts, asset finance and invoice finance.
Facility sizes will start at £1000 for invoice finance and asset finance and from £25,001 for loans and overdrafts.
The maximum advance to a business is £10m and up to £30m if a group of companies.
The minimum length of any facility is 3 months, with invoice finance and revolving credit lines having a maximum period of 3 years and asset finance and loans up to 6 years.
How is the government supporting?
The government is supporting by guaranteeing 80% of the loan. Unlike CBILS you will need to pay any interest and fees (upfront fees can’t be more than 5% of the facility amount).
As the government are supporting interest charges should be lower than normal lending – a lender can only offer and RLS facility if they wouldn’t have without the guarantee or if they would have only offered at a higher cost.
How is an application assessed ?
Lenders will all have different lending criteria, but all will be needing to prove the business is viable, albeit they can overlook short term performance due to the pandemic. They will be looking at historic accounts, bank statements, future prospects and the people running the business.
Borrowing can be for any legitimate purpose.
Lenders will be taking a view on the underlying strength of the business and how they would recover funds in the event of a default and in particular for lending under £250,000 where personal guarantees can not be taken.
How long does the scheme run for?
Currently the scheme is running from 6th April until 31st December 2021