New device to help businesses affected by the Covid pandemic
COMPANIES affected by the pandemic will be able to access a new loan program to help them grow and recover from the disruptions they have faced over the past 12 months.
The Recovery Loan Scheme (RLS), announced by the Chancellor in his Spring Budget, aims to ensure that businesses of all sizes can access the finance they need to get back on track.
The program starts April 6 and runs until December 31. It will replace the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS), which close this week.
The RLS works the same as previous programs, with the government providing lenders with an 80% guarantee for installations ranging from £ 1,000 to £ 10million, up to a maximum of six years.
• Term loans and overdrafts will be available between £ 25,001 and £ 10 million per company.
• Invoice finance and asset finance will be available between £ 1,000 and £ 10million per company.
• Financing terms can be up to six years for term loans and asset finance facilities. For overdrafts and bill financing facilities, the terms will be up to three years.
The eligibility criteria remain that the company must have been affected by the pandemic and demonstrate its viability before the pandemic as well as not be in collective insolvency proceedings. No personal collateral will be required for loans below £ 250,000 and a borrower’s primary private residence cannot be taken as collateral.
The money can be used for legitimate business purposes and those who have already received a CBILS or BBLS installation can use the new program, provided they meet all the criteria.
The RLS will be available through a network of accredited lenders, whose names will be announced in due course.
Although at first glance this looks like a continuation of existing programs, the National Association for Commercial Finance Brokers has reported that the appetite for credit is expected to tighten and that there may be a cap on interest rates. , which could reduce the number of lenders seeking to use the scheme. There is no mention of a principal and interest repayment holiday that previously provided businesses with much-needed respite during the first 12 months of their BBLS or CBILS installations.
For help and assistance contact Stephen Dinsmore, Corporate Finance Manager, Armstrong Watson, at 07788-712078 or by email at [email protected]