The Recovery Loan Scheme was launched on 6 April 2021. The scheme currently allows businesses of any size to access loans and other kinds of finance between £1,000 and £10 million. The project was initially meant to close on 31 December 2021 but the Chancellor has confirmed that the scheme will be extended until 30 June 2022.
The scheme is intended to provide further support to businesses to help them recover and grow following the disruption of the pandemic and the end of the transition period. Under the scheme, the government currently provides lenders with a guarantee of 80% on eligible loans provided to UK businesses. The scheme is currently open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
From 1 January 2022, the following changes will come into force:
– The scheme will only be open to small and medium-sized enterprises
– The maximum amount of finance available will be £2 million per business
– The guarantee coverage that the government will provide to lenders will be reduced to 70%
These changes will apply to all applications made on or after 1 January 2022. However, businesses that would like to benefit from the current scheme rules are encouraged to apply before the year-end.