V4B Business Finance

Recovery funding extension offers SMEs wider support

government support

More small and medium-sized businesses can now get Government help to access cheaper loans.

The new phase of the Recovery Loan Scheme (RLS) is no longer restricted to SMEs hit by the effects of the Covid-19 pandemic.

The scheme is now offering support for businesses struggling in the face of high inflation and the downturn in economic growth.

You can find out here how the Recovery Loan Scheme works, whether your business is eligible for recovery funding, how it could help your business, and how to apply for it.

What is the Recovery Loan Scheme?

The Recovery Loan Scheme supports access to finance that SMEs need to grow and invest.

It aims to improve lending terms on offer to businesses by guaranteeing a lender 70 percent of a loan. This gives them greater security by reducing risk. The borrower remains responsible for 100 percent of the financing.

Loans are available through a network of RLS accredited lenders. If they can offer a loan on better terms without the Government guarantee, they’ll do so.

The Recovery Loan Scheme is managed by the British Business Bank, which is owned by the Government.

The Government launched its Recovery Loan Scheme in April 2021. The scheme was extended by six months in January 2022.

These first and second phases of the programme were aimed at helping businesses recover from Covid-related financial pressures.

The Government then further extended the RLS, to June 2024. At the same time, it made better-value loans available to a wider range of businesses.

What’s different about phase 3 of the Recovery Loan Scheme?

The Recovery Loan Scheme was initially designed to help SMEs recover from the pandemic. To be eligible, applicants had to show their business had suffered as a result of the Covid crisis.

The second phase of the RLS remained a Covid support measure. But the third phase, introduced in August 2022, shifted the focus from Covid to general support for businesses.

Phase 3 of the RLS is aimed at helping SMEs manage rising costs and high inflation triggered by a chain of geopolitical and financial issues.

The war in Ukraine resulting in supply chain issues and soaring energy costs created a perfect storm for businesses at a time of a downturn in global economic growth and higher interest rates that pushed up the cost of loans.

The two-year extension of the Recovery Loan Scheme could also point to this type of Government support becoming more permanent. Previous extensions were limited to six months.

Who is eligible for the Recovery Loan Scheme?

A wide range of businesses in the private sector trading in the UK can apply for a recovery loan.

The handful of businesses excluded from the Recovery Loan Scheme include banks, building societies, and insurance companies.

Eligibility criteria for recovery financing include:

  • The core of business operations is in the UK.
  • Annual turnover doesn’t exceed £45 million.
  • More than 50 percent of turnover is from trading activity.
  • The lender considers the borrowing proposal practical.
  • The business isn’t in financial difficulty such as insolvency proceedings

Types of eligible businesses

The Recovery Loan Scheme is open to any legal entity carrying out business activity in the UK. Most types of businesses are eligible, including:

  • Sole traders.
  • Corporations.
  • Limited partnerships.
  • Limited liability partnerships.
  • Co-operatives and community benefit societies.

Can you get a Recovery Loan with bad credit?

You can still get a recovery loan if your business has a poor credit rating, although options may be limited when it comes to finding a lender.

Interest rates may be higher than if you had a good credit score.

Can you get a Recovery Loan if you’ve had other Government-backed funding?

You can still apply for a recovery loan if you’ve already borrowed money through the Government scheme, and you don’t have to declare a Covid impact.

Recovery loans are also on offer to SMEs who’ve had a loan through the Coronavirus Business Interruption Loan Scheme (CBILS) or the Bounce Back Loan Scheme (BBLS).

How can the Recovery Loan Scheme help your business?

Government-supported recovery funding can be used for any legitimate business purpose, including investment, cash flow management, and working capital.

For instance, a recovery loan could help you to:

  • Promote your business.
  • Hire new staff.
  • Launch a new product.
  • Buy new equipment.
  • Meet a large, one-off expense.
  • Cover seasonal trading fluctuations.

Up to £2 million is available per business group. The actual amount and terms offered are at the discretion of participating lenders.

Applying for a Recovery Loan

The Recovery Loan Scheme is open until June 30, 2024. To access recovery financing, you need to apply directly to an accredited lender or credit broker.

They’ll carry out credit and fraud checks. They’ll also need to see the business’s latest bank statements and accounts, and details of directors.

Repaying a Recovery Loan

If your RLS application is successful, when you need to start repayments will depend on your lender.

How long you get to repay the loan depends on the type of financing.

  • Term loans and asset finance – up to six years
  • Invoice finance – up to three years.

Recovery funding and V4B Business Finance

V4B Business Finance credit brokers are authorised to arrange financing under the Recovery Loan Scheme.

You can borrow from £25,001 to £500,000 over a maximum term of six years, as long as you have been trading for at least two years.

You’ll get a fast decision on whether you’re eligible, and the cash could be in your bank within 24 hours using our facilities.

There are no upfront arrangement fees, we offer flexible payment terms, and you’ll get a dedicated account manager.

The rate of interest on the loan is fixed, so you won’t have to worry about repayments increasing over time.

You can find out more about our recovery loans by:

We may be able to find you a loan for the same amount on better terms, without requiring the guarantee provided by the Government.

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