The Government-backed Coronavirus Business Interruption Loan Scheme (CBILS), which has helped many of our business customers secure much needed funding through the first year of COVID, has now been replaced by The Recovery Loan Scheme (RLS) which launched on 6th April 2021.
Businesses which have taken out a CBILS, CLBILS or BBLS facility, or other unsecured business loans, are also able to access the new scheme.
A key benefit of the scheme is that it can also be used to replace these existing debts with the potential to reduce the existing monthly debt burden by spreading the existing debt over an extended 6-year maximum repayment term, while at the same time providing an opportunity to generate additional working capital.
All without personal guarantees.
RLS supports access to finance for UK businesses as they recover and grow following the Covid-19 pandemic.
Its aim is to help businesses affected by Covid-19, and can be used for business purposes including managing cashflow, investment and growth.
It is designed to support businesses that can afford to take out additional finance for these purposes.
While a key objective of the Recovery Loan Scheme is to improve the terms on offer to businesses, if a lender can offer a business the choice of a commercial loan on better terms without requiring the guarantee provided by the RLS, they may do so.
The Scheme was initially scheduled to run until 31 December 2021, however, the government has already extended this until 30th June 2022 to provide sufficient time for all accredited banks and independent lenders to deliver support.
B2B Cashflow Solutions is accredited to provide business loans through RLS from £25,001 to £350,000 on repayment periods from 2 to 6 years through our platform of independently accredited lenders.
Scheme features through our panel:
- Unsecured RLS loans available from £25,001 to £350,000.
- Repayment terms from 2 to 6 years.
- Monthly in arrears capital and interest repayments are payable from the inception of the loan, however, interest-only payments may be available for up to 9 months (subject to lender).
- Fees are pre-determined by each lender and may be added to the term loan.
- Access to multiple Covid-19 schemes: Businesses that have taken out a CBILS, CLBILS, BBLS, or even a previous RLS loan, are able to access the new scheme without having to repay these existing loans, however the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS.
- There are NO Personal guarantees for facilities of up to £250,000.
- Above £250,000 personal guarantees are capped at a maximum of 30% of the outstanding balance of the RLS facility.
- No personal guarantees can be held over Principal Private Residences.
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Some Key RLS Eligibility Criteria.
- A business must have been impacted by Covid-19.
- A business must be carrying out trading activity in the UK.
- The lender will consider that the borrowing business has a viable business proposition despite any concerns over its short-to-medium term business performance caused by the impact of Covid-19.
- Lenders will be required to undertake credit and fraud checks for all applicants. The checks and approach may vary between lenders.
- Maximum loan value is capped at 25% of pre-COVID annual turnover, but this calculation must include any outstanding debt under CBILS or CLBILS, or other RLS loans (but not BBL).
- N.B. Each bank and independent lender has its own discretion within the headline parameters launched by the British Business Bank.
The following are not eligible under RLS:
- Banks, Building Societies, Insurers and Reinsurers (excluding Insurance Brokers).
- Public sector bodies.
- State funded primary and secondary schools.
What information is required?
As with the Government-backed Bounce Back Loan (BBL) and the Coronavirus Business Interruption Loan (CBIL), our RLS loan application will require certain information and supporting documentations.
These will include (but are not limited to):
- Latest year-end financial accounts
- Current trading period management accounts
- 6-month bank statements
- A breakdown of existing debt (including existing BBL/CBIL/CLBIL/RLS loans)
- Details of the impact COVID has had on the business
- Rationale for the loan, and the beneficial impact it will have for the business
Decision-making on whether a business is eligible for RLS is fully delegated to the British Business Bank’s accredited RLS lenders.
The legal bit:
The Recovery Loan Scheme provides the lender with an 70% government-backed guarantee against the outstanding balance of the facility. The borrower always remains 100% liable for the debt.
RLS is managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA.