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COVID business loans scheme extended for two years
The Recovery Loan Scheme, which helped businesses throughout the pandemic, has been extended for a further two years.
Launched on 6 April 2021, the Recovery Loan Scheme (RLS) was one of several finance schemes available to struggling businesses.
It provided financial support to businesses across the UK as they recovered and grew following the Coronavirus pandemic.
Nearly £80 billion was lent to SMEs through these schemes, but only £1 billion of borrowing was made via the Recovery Loan Scheme.
Scheme supported 19,000 businesses
The RLS has supported almost 19,000 businesses with an average of £202,000 in support.
It could be used to finance any legitimate business purpose – including managing cash flow, investment and growth. However, you had to be able to afford to take out additional debt finance for these purposes.
It was thought the scheme would be replaced with a version called RLS2, but now the Government has decided to extend the original scheme with the addition of a personal guarantee from borrowers.
How will the scheme work?
Businesses will be able to apply for the latest version of the scheme in August. The £2 million maximum loan amount remains the same and the Government will underwrite 70 per cent of lender liabilities, at the individual borrower level, in return for a lender fee.
Business Secretary, Kwasi Kwarteng, said: ‘‘The extension of the recovery loan scheme will help ensure we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK.”
Shevaun Haviland, director general of the British Chambers of Commerce, added: “The two-year extension to the recovery loan scheme will be a lifeline for many businesses facing a rising tide of costs. It is now essential that businesses in need of this extra support can access the scheme as quickly as possible.”
If you intend to make use of this extension to the Recovery Loan Scheme, then you must seek professional accounting advice beforehand to make sure you maximise your use of the funding.