Chancellor Rishi Sunak has extended a coronavirus loan guarantee scheme in a bid to protect UK businesses into next year.
Sunak used his Autumn Budget speech on 27 October 2021 to announce a six-month extension of the recovery loan scheme.
The scheme had been due to end on 31 December 2021 but is now set to close on 30 June 2022, subject to any further extension.
Around 1,000 more firms have been told they can borrow up to £200m but have yet to tap into it, possibly because the terms are less generous than previous pandemic loan schemes.
Catherine Lewis La Torre, chief executive at the British Business Bank, said:
"A six-month extension to the recovery loan scheme will provide valuable support for smaller businesses as they look beyond the pandemic and towards the opportunities available to them in the recovery."
What is the recovery loan scheme?
Launched on 6 April 2021, the recovery loan scheme is intended to be a bridge between the more generous bounce-back loans and coronavirus business interruption loan schemes and more normal credit conditions.
It provides credit worth up to £10 million per business and up to £30m across a business group, with loans available to help fund growth and investment, or manage cashflow.
At the end of October 2021, a total of £822.8m had been borrowed by 5,137 UK businesses since the scheme was launched at the start of the 2021/22 tax year.
The scheme offers the following recovery support until 31 December 2021:
- term loans or overdrafts of between £25,001 and £10m per business
- invoice or asset finance of between £1,000 and £10m per business.
No personal guarantees will be taken on facilities up to £250,000, and a borrower's principal private residence cannot be taken as security.
The maximum length of the facility depends on the type of finance you apply for and will be:
- up to three years for overdrafts and invoice finance facilities
- up to six years for loans and asset finance facilities.
How to apply
First, go to the British Business Bank's website and find a list of accredited lenders. Not every lender will provide all types of finance under the scheme.
Then, click on a lender's icon to be taken to their website and from there, you can find more information on the amounts they are able to offer.
If you decide to apply for a recovery loan, it will be up to the lender to decide whether or not to accept your application.
You can expect the lender to conduct background checks on your business, which will help inform their decision.
Should your application be unsuccessful, don't lose faith. You can approach any of the other lenders on the accredited list.
Changes from January 2022
From 1 January 2022, the scheme will only be open to small and medium-sized enterprises, rather than all businesses large and small.
Also, the maximum amount of finance available will decrease to £2m per business.
The guarantee coverage that the Government will provide to lenders will be reduced to 70%, down from 80% the Government currently provides.
We can check if your business is eligible.