Recovery Loan Scheme to replace Bounce Back and Business Interruption Loans next month
The existing £73bn schemes are being shuttered at the end of March.
The Government is launching a new multi-billion-pound business lending guarantee scheme at the end of the month, Chancellor Rishi Sunak announced in the Budget today.
The Recovery Loan Scheme (RLS) will step-in to replace both the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS/CLBILS) which are due to close for new applicants on 31 March.
“Some businesses will also need loans to see them through,” Sunak told the House of Commons.
“As the Bounce Back Loan and CBIL programmes come to an end, we’re introducing a new Recovery Loan Scheme to take their place.”
RLS will offer an 80 per cent Government guarantee to lenders taking part in the scheme, on SME loans of between £25,000 and £10m, in order to continue encouraging new lending.
The scheme will be open to all businesses, including those who have already borrowed under the BBLS, CBILS or CLBILS.
It’s not yet clear which lenders will be taking part in the new RLS scheme, although Funding Circle and Starling Bank both told AltFi that they are looking into it and previous lenders in the schemes had included Capital On Tap,Starling Bank,Atom Bank and Iwoca.
“We look forward to facilitating loans under the new scheme, ensuring small businesses have the finance they need to invest, create jobs and drive the economic recovery.”
A spokesperson for Starling Bank, which lent well over £1bn as part of the BBLS and CBILS, told AltFi: "Starling has welcomed the chance to support businesses with the CBILS and BBLS scheme and we wish to continue to support our business customers, as such we will be looking into the new scheme and we will let our customers know.”
The British Business Bank set out further details for RLS this afternoon, including the fact that lending will be credit checked (unlike BBLS) and that interest would be charged from the outset and over a term of up to six years.
Ravi Anand, managing director of SME lender ThinCats which took part in CBILS, said: "We look forward to seeing the eligibility criteria in more detail, however, the increase in maximum loan size to £10m is also welcome as it will enable significant investment from many mid-sized businesses that were restricted by the CBILS scheme.”