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Recovery loans of up to £10m available to businesses requiring support

Government-backed loans of up to £10 million are to be made available for companies that need support until the end of the year.

As announced in the Budget last month, Chancellor Rishi Sunak has opened the Treasury’s Recovery Loan Scheme to tide businesses over, with past Covid-19 lending schemes due to run out.

From Tuesday April 6, the new finance initiative will replace the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and its larger sibling CLBILS.

As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis

Rishi Sunak, Chancellor

The Treasury has promised to cover 80% of what banks lend if businesses do not pay back their loans.

Mr Sunak said: “We have stopped at nothing to protect jobs and livelihoods throughout the pandemic and as the situation has evolved we have ensured that our support continues to meet businesses’ needs.

“As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis.”

Businesses will be able to access loans varying in size from £25,001, up to a maximum of £10 million.

Invoice and asset finance will be available from £1,000, according to the Treasury.

To find out more about how we can assist you with your Business Loan requirements, please click here to get in touch

The new scheme, which runs until December 31, has the same Government guarantee as the CBILS and CLBILS, but is less generous than the 100% guarantee for the BBLS.

It will be administered by the British Business Bank, with loans available through a “diverse network of accredited commercial lenders”, officials said.

Businesses will be able to loan up to £10 million through the new recovery scheme (Victoria Jones/PA)
Interest rates have been capped at 14.99% and ministers are urging lenders to ensure they keep rates down in a bid to ensure business owners pay less than the ceiling figure.

The Recovery Loan Scheme is permitted for use as an additional loan on top of support received from the emergency schemes put into place last year.

Bounce back loans were first unveiled in late April last year and became available to businesses just days later in early May.

With the higher guarantee, and less rigorous controls from lenders, the bounce back loans have proven by far the most popular of the three schemes, both in terms of the number of loans granted and the total amount lent.

By February 21, more than 1.5 million businesses had been lent £45.6 billion in total, with another half a million having applied.

The BBLS was intended to quickly funnel cash from banks to small businesses, up to £50,000 each. The Government gave a 100% guarantee on the loans to ensure banks were not reluctant to lend.

The BBLS, CBILS, CLBILS and the Bank of England’s Covid Corporate Financing Facility have between them provided tens of billions of pounds in loans to UK businesses.

Business Secretary Kwasi Kwarteng said: “We’re doing everything we can to back businesses as we carefully reopen our economy and recover our way of life.

“The launch of our new Recovery Loan Scheme will provide businesses with a firm foundation on which to plan ahead, protect jobs and prepare for a safe reopening as we build back better from the pandemic.”

Source: Express & Star

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Government to back new business loans of up to £10m

The Government is to back business loans of up to £10 million for companies that need support until the end of the year as its Covid-19 lending schemes run out.

Chancellor Rishi Sunak told MPs he plans a new Recovery Loan Scheme to tide businesses over.

From April 6 it will replace the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and its larger sibling CLBILS.

The Treasury will promise to cover 80% of what banks lend if businesses do not pay back their loans.

Mr Sunak said: “Some businesses will also need loans to see them through. As the Bounce Back Loan and CBIL schemes come to an end, we’re introducing a new Recovery Loan Scheme to take their place.

“Businesses of any size can apply for loans from £25,000 up to £10 million, through to the end of this year.”

The new scheme has the same Government guarantee as CBILS and CLBILS, but is less generous than the 100% guarantee for BBLS.

Bounce back loans were first unveiled in late April last year and became available to businesses just days later in early May.

With the higher guarantee, and less rigorous controls from lenders, the bounce back loans have proven by far the most popular of the three schemes, both in terms of the number of loans granted and the total amount lent.

By February 21, more than 1.5 million businesses had been lent £45.6 billion in total, with another half a million having applied.

The BBLS was intended to quickly funnel cash from banks to small businesses, up to £50,000 each. The Government gave a 100% guarantee on the loans to ensure banks were not reluctant to lend.

To find out more about how we can assist you with your Business Loan requirements, please click here to get in touch

BBLS, CBILS, CLBILS and the Bank of England’s Covid Corporate Financing Facility have between them provided tens of billions of pounds in UK business loans.

In September, Mr Sunak promised a new form of Covid loan scheme would be introduced at the beginning of the new year to replace the three Treasury-backed schemes. However this was later put on hold as infections and deaths soared, leading to more lockdown measures.

The Treasury also said it plans to give HM Revenue and Customs around £100 million to hire 1,265 new staff to combat fraud in the support packages, including the furlough and self-employment support schemes.

Helen Dickinson, chief executive of the British Retail Consortium, said: “We hope the loan scheme will play an important role in addressing the cash flow challenges that many firms are facing.

“But it is vital that the aspirations of the Chancellor are met by action from commercial lenders to ensure that this all important finance reaches its destination quickly.”

Suren Thiru, the head of economics at the British Chamber of Commerce, said: “The acid test for the new scheme will be whether it is able to support the recovery by getting credit flowing to the firms who most need it.

“The scheme must be right from day one to ensure that businesses and banks can use it to help SMEs return to growth. Businesses will need an approach to operation of the new scheme that is clear, consistent and considerate to the impact of the pandemic on their financial position.”

Source: Shropshire Star