Covid 19 Update: Sunak extends Recovery Loan Scheme for businesses for an additional six months to 30 June 2022
Today, the Chancellor confirmed recent speculation that the state-backed Recovery Loan Scheme for UK businesses would be extended for a further six months.
Originally launched last April as a ‘bridge’ between previous schemes (the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme) and regular bank lending the December deadline was always subject to review.
Finance will be restricted to a maximum of £2 million per business and the government-backed guarantee will be reduced from 80% to 70% to encourage the lending market to move towards normality as the economy continues to recover.
27th October 2021
Chris Bowles See profile
Chris Bowles, a partner at Old Mill’s Wells office comments: “The government’s loan programmes have helped many local businesses during the pandemic and this extension could be a lifeline for firms grappling with the spiralling costs of raw materials combined with supply chain problems and staff shortages in certain sectors.
“The Recovery Loan Scheme potentially helps SMEs access additional finance as they rebuild but my main concern revolves around lenders’ appetite for approving additional loan as anecdotal evidence suggests that some businesses have already been turned down because of the stricter financial terms being applied to these loans.
“These loans are now 70% government-backed and lenders can also insist on personal guarantees from directors on loans over £250,000 so I would hope to see more flexibility than we’ve seen up to now on loan approvals.”