Recovery loan program open to applications

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the Recovery loan program is now open for applications. Administered by the British Investment Bank, this is a new program to support access to finance for UK businesses as they navigate the COVID-19 health crisis. The program, announced in the March 3, 2021 budget, is expected to last until December 31, 2021.

The new scheme will allow UK businesses to borrow up to £ 10million for individual businesses and up to £ 30million in a group. The funds can be used for legitimate business purposes, including managing cash flow, growth and investments.

The British Business Bank is the organization that administers the Bounce Loan Program (BBLS), Coronavirus Business Interruption Loan Program (CBILS), and Coronavirus Large Business Interruption Loan Program (CLBILS). The Stimulus Loan Program aims to continue to support small businesses.

Features of the program include:

  • Up to £ 10 million per company: The maximum amount of a facility provided under the scheme is £ 10 million per company (maximum £ 30 million per group). Minimum facility sizes vary, from £ 1,000 for asset and bill funding, to £ 25,001 for term loans and overdrafts.
  • Wide range of products: Businesses can choose from term loans, overdrafts, asset finance, and invoice finance (provided the lender is accredited for each of these types of finance).
  • Term: Term loans and asset finance facilities are available from three months to six years, with overdrafts and invoice finance available from three months to three years.
  • Interest and Fees Payable by Company Upfront: Companies are responsible for paying interest charges and all costs associated with RLS installation.
  • Access to multiple plans: Companies that have purchased a CBILS, CLBILS or BBLS installation can access the new system, although the amount they borrowed under a previous system may in certain circumstances limit the amount they can borrow under the RLS.
  • Pricing: The annual effective interest rate and upfront and other charges cannot exceed 14.99%.
  • Personal guarantees: Personal guarantees are not permitted for installations of £ 250,000 or less. Above £ 250,000, the maximum amount that can be covered by RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds from the company’s assets have been applied. No personal guarantee can be held on the main private residences.
  • The facilities backed by the payback loan program are provided at the discretion of the lender.
  • Lender Guarantee: The program provides the lender with a government guaranteed guarantee against the outstanding balance of the facility. The borrower always remains 100% responsible for the debt.

Eligibility criteria include:

  • Impact of Covid-19: The borrower must confirm to the lender that he has been affected by Covid-19.
  • UK Based: The borrower must carry on business in the UK.
  • Viability test: The lender will consider the borrower to have a viable business proposition, but may disregard any concerns about their short to medium term business performance due to the uncertainty and impact of Covid-19 .
  • Credit and Fraud Checks for All Applicants: Lenders are required to perform credit and fraud checks for all applicants, as well as regular checks such as Know Your Customer and Anti-Money Laundering. The checks and approach may vary among lenders.
  • Revenue Limit: There is no revenue restriction for companies that access the program.
    How to register

Lenders previously accredited to provide CBILS have been asked to apply for accreditation for the payback loan program. Businesses are advised to first contact their own finance provider through the lender’s website. The Bank notes that if a lender can offer a borrower the choice of a commercial loan on better terms, without requiring the collateral provided by the RLS, it must do so.

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