Get ready for the launch of this new Government-backed loan in April
The Government has announced the launch of the new Recovery Loan scheme, which will offer finance to support businesses affected by COVID-19.
This new loan scheme, which will be available between 6 April and 31 December 2021, will follow on from the existing Coronavirus Business Interruption and Bounce Back Loan Schemes – offering a Government Guarantee of 80 per cent of the finance to the lender to ensure they continue to have the confidence to lend.
Under the new scheme, two types of finance are available:
- Term loans and overdrafts of between £25,001 and £10 million per business.
- Invoice finance and asset finance of between £1,000 and £10 million per business.
Loans will be available through a network of accredited lenders, with finance terms of up to six years for term loans and asset finance facilities and three years for overdrafts and invoice finance facilities.
No personal guarantees will be taken on facilities up to £250,000 and a borrower’s principal private residence cannot be taken as security.
To be eligible for a loan, you will need to demonstrate that your business:
- Is viable or would be viable were it not for the pandemic
- Has been impacted by the Coronavirus pandemic
- Is not in collective insolvency proceedings.
Businesses that have used other forms of COVID financial support and loans will be eligible, as long as they meet these criteria.
Further details on how to apply and details of accredited lenders will be released in due course, but businesses should begin to consider the needs of their business now.
Thinking of taking out a loan? We are here to help
The new Recovery Loan Scheme is likely to require companies to provide accounts and other evidence from the last one to three trading years, as well as forecasts for the future.
If you require help compiling this information or you need advice on making an application, please contact us.